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The ‘Roar’

‘Market timing’ has been described as a fool’s errand by many over the years. The ability to know the stock market’s direction and act on it, profitably, has failed since the beginning of markets. After all, if it were simple to do, everyone would just do it. However, one major problem with timing the market is simple – you need to be right not once, but twice - on the sell and on the buy or vice versa. Forecasting the market even once is difficult, but to do it twice, in a short or intermediate period can be extremely difficult. To do this over and over again successfully, for decades, seems nearly impossible.
 

Frequent readers of this newsletter know that we repeatedly talk about our lack of ability to forecast what will happen next in the markets. It can seem like a broken record always writing about how the tea leaves said the market will ‘zig’ only for it to ‘zag.’ Yet here we are again, at the end of 2023, with that familiar refrain on our lips.  


If you weren’t looking, here’s the recap: Against the backdrop of bad news piled on top of more bad news – higher inflation, higher interest rates, wars, political upheaval - the stock market blew our expectations away with a very positive year. The S&P 500 was up 24.2%1 for the year, while the tech-heavy NASDAQ was up over 43%1. Other indexes like the Russell 2000 (smaller companies) was up 16.9%1 and international stocks were up 16%2 as they were also winners.


If the news is bad, then why is the market good? Attribution of market performance can often be more art than science. Nevertheless, there are reasons that the doom and gloom universally forecasted at the beginning of 2023 was not on target. One possible reason is that the promise of artificial intelligence (AI) becoming the next great economic driver burst on the scene and lifted tech stocks. Then, in the fourth quarter, inflation readings dropped from historically high to normal rates and sparked a rally in stocks and bonds. Low unemployment and wage growth both persisted under significant pressure brought on by the Federal Reserve’s interest rate increases, and spending in the US did not let up as the data was positive enough to avoid a recession, for now3. On the other hand, the interest rate curve remains ‘inverted,’ which is when short term interest rates are higher than long term rates, a signal that, in the past, has been correlated with high odds of an imminent recession.


The question of whether we are witnessing an economic ‘miracle’ and the Fed has successfully ‘threaded the needle’ on inflation (without causing a recession) or it is a head-fake with the worst yet to come, persists. One goal for some of our clients is to safeguard against periodic swings in markets so that they don’t dictate personal spending decisions. Financial planning and asset allocation is an integral aspect to developing investment strategies designed to be responsive to each client’s individual needs – not the S&P’s yearly results. Along the way, we are taking a careful, active approach to diversification and rebalancing in accordance with your specifics.  As always, please call with any questions about your portfolios, changes in your financial life, and/or other financial decisions that you are facing.  We wish you and your family a healthy, happy, peaceful and prosperous 2024!

 

 

Regards,

Scott Lasky, CFP™

 

  1. Source: Morningstar, Inc.

  2. Morningstar Global Markets index, 2023 performance

  3. FRED – St Louis Federal Reserve

 

All statements are opinions and should not be construed as facts. This newsletter is for informational purposes only and should not be deemed as a solicitation to invest, or increase investments in Lionshead Wealth Management products or affiliated products. Information provided is for educational purposes. Your advisor does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions. Further, your advisor makes no warranties with regard to such information or a result obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Lionshead Wealth Management, LLC is an investment adviser in New York. Lionshead Wealth Management, LLC is registered with the Securities and Exchange Commission (SEC).  Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission.  Lionshead Wealth Management only transacts business in states in which it is properly registered or is excluded or exempted from registration.  A copy of Lionshead Wealth Management 's current written disclosure brochure filed with the SEC which discusses among other things, Lionshead Wealth Management's business practices, services and fees, is available through the SEC's website at: www.adviserinfo.sec.gov. Past performance is not an indication of future results. Please note, the information provided in this document is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services. Nothing provided in this document constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction. This document may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio's operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of Lionshead Wealth Management or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.

 All statements are opinions and should not be construed as facts. This newsletter is for informational purposes only and should not be deemed as a solicitation to invest, or increase investments in Lionshead Wealth Management products or affiliated products. Information provided is for educational purposes. Your advisor does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions. Further, your advisor makes no warranties with regard to such information or a result obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.S&P 500® Index: is an unmanaged index of 500 common stocks primarily traded on the New York Stock Exchange, weighted by market capitalization. Index performance includes the reinvestment of dividends and capital gains.

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