Broker Check
Quarterly Market Insights:  Q2, 2023

Quarterly Market Insights: Q2, 2023

July 10, 2023


Financial markets have rebounded thus far this year. Through June, the U.S. stock market was up 15%, foreign stocks were up 12% and the bond market was up 2%. The excellent return in the U.S. market is a little misleading as seven individual stocks (Apple, Microsoft, Nvidia, etc.) accounted for more than 90% of the market’s returns. Average stocks were slightly down to slightly positive.

Notwithstanding the narrowness of the breadth, the stock market’s outperformance was a welcome relief from last year and was also somewhat of a surprise. Consider the negative headlines we dealt with during the first half of this year: rising interest rates, stubbornly high inflation, major bank failures (Silicon Valley Bank, etc.), a debt limit “crisis” and increasing tension between the U.S. and China. Given these headwinds, the stock market’s performance was somewhat remarkable. Our takeaways from this experience:

  • The American economy, its businesses and consumers are incredibly resilient. It helps to remember that we’re not investing in “markets”; we’re investing in a number of great companies run by very smart people who are committed to growing their businesses and increasing shareholder value.
  • The past six months confirmed the old adage that the key to long-term investing success is “time in the market”; not “market timing”. Market timers would have sold down or out of the stock market going into this year…and missed out on the returns we enjoyed.

What’s the outlook? After the runup we’ve had this year, we’re a little cautious about the very short term and wouldn’t be surprised by some kind of correction. In addition, the jury is still out as to whether the lag effect of tighter monetary policy will eventually induce at least a mild recession. Having said that, we’re as optimistic as ever about the longer term. With interest rates nearing their peak and inflation moderating/declining, we see a good setup for the economy and the stock market on the other side of this cycle. We also see the ability to generate healthy, positive returns in the bond market over the next few years. Lastly, investors are holding record levels of cash in their brokerage and bank accounts.  This is unlikely to last; the cash will ultimately be deployed and both the economy and financial markets should benefit. Regardless of what happens in the short term, we’re encouraging our clients to be fully invested going into the last part of this year.

Follow then link below for more color on the 2nd quarter economy and financial markets:


Quarterly Market Insights: Q2 2023


Please let us know if you have any questions or if we can do anything for you. Thanks for your support!


Matt and Andrew