Well, that may have seemed a bit disappointing, or maybe anti-climactic.
Coming off a terrible 2022, expectations were high for markets' 2023 debut. "Out with the old, in with new," as it were, but that's not how markets work.
The S&P 500, down 18.11% in 2023, was seemingly off to a solid start on Tuesday, rising 1% within the first 11 minutes of trading. Before 1:00 pm, the index was off 1.14%, and closed the day down 0.4%. The Russell 2000 (down 0.59%) and Russell Microcap (down 0.7%) also started the year in negative territory.
We had better get used to more of the same, it's a long year with 251 or so trading days -- that's more than 1,635 hours of regular session trading -- with lots of unknowns along the way, some good, some bad. That's all par for the course, and we need to learn to ignore every up and every down, every gyration, and not live and die by all of the noise.
Easier said than done, I know.
History tells us that the last time the S&P dropped two years in a row was 2001 (-13%) and 2002 (-23%); that was actually part of a three-year consecutive drop given 2000's -10%. Before that, you've got to go all the way back to 1973 and 1974, and before that, 1940 and 1941 (by the way, 1939 was also a down year, making it another three-fer).
Could 2023 be the completion of the latest two-year consecutive down streak for the S&P 500? Sure could. However, uncharacteristically, I don't believe that will happen. My ever-growing gut tells me that we may see some modest gains this year.
There's plenty to worry about: recession, inverted yield curve, Federal Reserve moves, seemingly unending government spending, a national debt that continues to pile on the trillions while few if any in power seem to care, inflation, wars, and rumors of war. And those are only a handful of the known issues.
However, markets are forward looking, and can see beyond the current. They can rise in a recession, or in inflationary times. Markets reflect expectations for the future, not just the current predicaments. If there are indeed brighter days ahead, the markets will put some focus there.
We won't know the results for 2023 until 2023 ends, of course. That may sound idiotic, but it's true. I expect quite a roller-coaster ride getting to December 29, 2023, and hopefully some opportunities along the way.
Happy investing in the New Year!
