Looking Forward
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Look Forward
I’m done with 2022. So done. So done I had to change my font to get excited about 2023.
My title, Look Forward, is a way to remind myself not to look back. I don’t want to dwell on what did or did not happen in 2022.
In the financial markets year end is when the performance clock resets to zero.
Prices for both stocks and bonds ended the year in negative territory, this means a big sad minus sign for our portfolios.
Although the performance clock resets, the economy does not. There is no “do over” or “let’s not do that again”. Where the economy is today is where it will be on January 1st, 2023.
Do I think 2023 will be better for stocks and bonds? I do.
The reason I believe 2023 will be better is that the work of the Fed, raising interest rates, is done. They might still raise rates a couple of times in 2023 but nothing like the 4.25% we have experienced in 2022.
Raising rates happens as soon as the Fed says it has happened. The impact of higher rates is immediate in areas like banking and borrowing. In other areas, like food prices, energy, and housing it takes time for the effect to flow through the economy. It is one of the reasons decisions by the Fed are “data dependent”.
Data dependent does not mean one or two months of data, It means months or quarters to see if higher interest rates have been effective.
When the Fed stops raising rates we know implicitly that inflation has come down. In the past the Fed has targeted inflation at 2%. This time around I suspect they will be satisfied with a slightly higher number.
Still, it is a positive sign for the markets.
For savers, the rate increases have been a short-term boon. Cash sloshing around that earned ZERO at the beginning of 2022 can now earn an interest rate around 4%.
For holders of longer maturity bonds, prices have come down. If you are a buy and hold type of bond owner the price declines don’t hurt so much. You planned to hold bonds to maturity anyway.
And remember, what goes up must come down. The Fed will start to lower interest rates. Raising and lowering rates is the economic cycle of life.
The stock market is part of the economic cycle of life too. We had three GREAT years of performance in 2019, 2020 and 2021. Having a down year like 2022 is more normal than you might think.
Very few (if any) of the stock market prognosticators in 2022 were right.
Taking a “bullish” view on the stock market through 2022 was a dream.
How is this for a dream? One of the highlights of the year!
$2.04 billion (Powerball) November 8th, 2022
A single winning ticket for the record Powerball drawing was sold at a gas station and convenience store called Joe’s Service Center in Altadena, California, a community located north of Los Angeles. While the business’ owner received a $1 million bonus from Powerball for selling the winning ticket, the identity of the ticket’s owner remains unknown.
Unfortunately in California if you win you cannot remain anonymous. That could pose big problems for a person with a billion plus dollars.
Full disclosure, I did not win the $2 billion jackpot.
This time each year I spend time preparing for the year to come. Preparing mentally that is, by putting “things” into perspective.
Once again I am including “Desiderata” Desiderata is not an ancient philosophical discourse. It is not biblical. It is not existential.
The lyrics to songs in the musical “Hair” did not come from Desiderata.
Max Ehrmann, a poet, and lawyer from Terra Haute, Indiana authored Desiderata in 1952.
Desiderata
By Max Ehrmann
Go placidly amid the noise and haste,
and remember what peace there may be in silence.
As far as possible without surrender
be on good terms with all persons.
Speak your truth quietly and clearly;
and listen to others,
even the dull and the ignorant;
they too have their story.
Avoid loud and aggressive persons,
they are vexations to the spirit.
If you compare yourself with others,
you may become vain and bitter;
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.
Keep interested in your own career, however humble;
it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs;
for the world is full of trickery.
But let this not blind you to what virtue there is;
many persons strive for high ideals;
and everywhere life is full of heroism.
Be yourself.
Especially, do not feign affection.
Neither be cynical about love;
for in the face of all aridity and disenchantment
it is as perennial as the grass.
Take kindly the counsel of the years,
gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune.
But do not distress yourself with dark imaginings.
Many fears are born of fatigue and loneliness.
Beyond a wholesome discipline,
be gentle with yourself.
You are a child of the universe,
no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you,
no doubt the universe is unfolding as it should.
Therefore be at peace with God,
whatever you conceive Him to be,
and whatever your labors and aspirations,
in the noisy confusion of life keep peace with your soul.
With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful.
Strive to be happy.
Desiderata by Max Ehrmann
Copyright © 1952.
*The Confused History of Desiderata (desiderataenergy.com)
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