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Market Insight

Navigating the Courts of Finance: NBA All Stars, Predictions, and the Perpetual Game

According to the National Federation of State High School Associations, almost 600,000 boys participate on high school basketball teams. However, less than 5% of these athletes move on to play at the collegiate level, with a fraction of that, less than 1%, competing on Division I teams - the highest level . Despite their exceptional skill, only 1% of Division I players manage to reach the NBA , which employs around 550 players across all teams. The trajectory for female basketball players follows a similar pattern. Simply labeling professional basketball players as "the best of the best" fails to capture the extent of their talents and the obstacles they've overcome. Among this elite group are about two dozen individuals with extraordinary abilities – the All Stars.

Time Is On Your Side

Though it’s difficult to measure, 2023 may be remembered one of the worst years ever for economists and market forecasters. As the clock struck midnight on New Year’s Eve this past year, even the oft maligned weather forecaster looked like a seer when compared to the most followed financial prognosticators. Forbes labeled 2023 as “The Year of Terrible Market Predictions” with Business Insider echoing that sentiment in an article titled “Stock Market Gurus Predicted a Grim 2023. They were Dead Wrong.”

Quarterly Newsletter

The Bumpy Road to Normal

Higher for longer. Over the past several weeks, those three words have spooked the stock and bond markets. The phrase refers to interest rates, and the Federal Reserve’s most recent projection is that today’s seemingly high interest rates might last longer than they and most of the world had previously anticipated. The Fed hinted towards the “neutral rate” (an invisible Goldilocks-like interest rate that keeps the economy growing but inflation under control) having to be higher than recently thought. Higher interest rates make borrowing more expensive for consumers and businesses. Thus, the fear is that the economy might eventually encounter the recession that economists have been waiting for over a year.

Quarterly Newsletter

When it Comes to Investing, Less is More

Avoidance and procrastination are natural enemies of goal achievement. To put off to tomorrow, what can be done today is a surefire way never to complete those nagging household chores, finally read that book your friend recommended last year, or cross the finish line feeling strong at a local 5k race. But, according to Nobel prize winner Richard Thaler, these same impediments to accomplishment could make you a better investor.

Quarterly Newsletter

Inflation, Rising Interest Rates, Bank Failures, and a Recession. Sometimes, Bad News is Good News.

Investors were eager to put 2022 behind them as the clock struck midnight on December 31. After all, it was the worst year for stocks since 2008 and the worst year for bonds - ever. Yet, there was little cause for optimism as it seemed, and still does, that 2023 would not offer a reprieve from the challenges that faced the economy and financial markets last year. Namely - inflation, rising interest rates, and a looming recession. Add to that mix the largest bank failure since 2008, and one would assume that the losses would have extended through this year’s first three months. However, in the world of financial markets, sometimes bad news is good news.

Why Your Money is Like a Bar of Soap

It’s been a tough 12-month stretch for financial markets. The S&P 500 (an index of the 500 largest companies in America) was down nearly 20% in 2022 - its worst year since 2008. By many measures, bonds had their worst year ever, recording double-digit losses. Bellwether stocks that carried the market for the past several years had it far worse. On a combined basis, Apple, Microsoft, Alphabet (Google), Tesla, Meta (Facebook), Amazon, and Netflix were down nearly 50%. Many popular “Covid stocks,” like Peloton and Zoom, are down over 90% from their peaks. Some investors in the riskiest corners of the market (like cryptocurrencies) were wiped out altogether. Yes, 2022 was a rude awakening. And while there was little place to hide, those who followed old lessons of diversification and risk management likely avoided life-altering losses.