“It takes strong winds to move a sailing ship, but only a small rudder to define its direction.”
2023 is quickly approaching, and it’s almost that time for us to turn the page on one of the worst years in market history. This past year has been brutal for just about every investor across all risk spectrums, with 2022 being one of the worst years for “safe” assets in the history of markets.
No risk, no reward. We hear it all the time and while it’s easy to say, it’s an entirely different thing to live through. The last three years have been nothing short of an emotional rollercoaster. From an unforgettable, once in a generation pandemic that stopped the world in its tracks in 2020…to a world of free money and a “to the moon” mentality across all asset classes in 2021…to one of the worst financial hangovers that we’ve seen in history in 2022. To make matters worse, there are more storm clouds ahead with a possible recession looming in 2023.
But so goes the long-term cost of success. Most of you have been here before, having lived through the Great Financial Crisis where from October 2007 to March 2009, the S&P 500 fell by almost 50%. What followed, however, was an almost 400% gain from March 2009 to November 2022.
While more pain could be ahead in the short term, those who can keep their cool and find opportunities will eventually be rewarded. Our team is committed to helping you navigate whatever markets throw at us in 2023.
Our Top Idea for 2023 – Short Term Treasuries As Your Portfolio Rudder
In the current environment, the most important “bucket” in your financial plan is your liquidity bucket. It’s the bucket that lets you gain confidence and after a 2021 that saw massive cash injections into the economy, many are still sitting on elevated levels of cash. Most of it at a bank earning next to nothing. We think an opportunity could exist here. As of 11/28/2022, the yield on a 3 Month T-Bill is 4.30%. Meanwhile, current 2-3 Year CD rates are just about 4%. Guaranteed short term bonds can now meaningfully contribute to client goals.
If stocks and risk assets are your sails that will ultimately power your journey in the long term, let treasuries be the rudder that allows you to steer through the storm in 2023. Your liquidity bucket won’t make you rich, but it will provide you with the confidence to stay the course and take advantage of opportunities to come.
Take a deep breathe. Recalibrate. Redirect. Harness The Wind. Sail on.
*Past performance is no guarantee of future results. Please note that individual situations can vary. All investing involves risk including loss of principal. No strategy assures success or protects against loss. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
*Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. All indices are unmanaged and may not be invested into directly.