While 2022 was a down year for markets, 2023 has started with a bang. As anyone with experience investing in the capital markets will tell you, we will have years where the markets are positive and years where the markets are negative. If these negative market years did not appear from time to time, there would be no future reward for taking market risk. In other words, if negative years were not a part of the market cycle there would be no expected future returns over the risk-free rate. At Claris, our mission during these turbulent times is to stay disciplined and patient.
- Understand that negative markets are a key part of the market cycle
- Diversification was a key strategy in 2022, with value stocks outperforming growth stocks in both domestic and international stocks
- Develop an investment strategy for 2023 by referencing history and practicing patience
Lessons Learned in 2022
We can look back on 2022 and highlight a few bright spots for investors. Value stocks outperformed growth stocks by the largest margin since 2000. This was true for domestic and international stocks. Can anyone say “Diversification?” I will say it again: investors were rewarded for remaining disciplined and sticking with a plan.
Looking Ahead into 2023
There’s no way to know where markets are headed. It can be hard to imagine an upturn in the market when prices have fallen or when the direction of the economy looks dire. But history argues for patience. As we look at stock prices that in some cases are still well off their highs, it’s helpful to keep history in mind entering 2023. That’s the definition of thinking of investing for the long term.
So, as you start 2023 take a lesson from the market: be forward-thinking and don’t get bogged down with what happened last year. Start the year off with a clean slate just like the markets do every day.
Contact Claris to see how our investment approach is designed to help you understand, invest and relax.