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| IS ALL YOUR SHOPPING DONE?: If not, get going, you don’t have much time! |
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| “IF ONLY”: These are words many of us are tempted to use when looking backward at our investment performance. “If only we had put everything in cash on January 1.” “If only we had shorted the S&P 500 to start the year.” Jason Zweig writing in the Wall Street Journal this week added more “what ifs.”
“If only you’d listened to that voice in your head that told you inflation would shatter all modern records and energy stocks would surge. If only, when you just knew the Federal Reserve would jack up interest rates, you’d bailed out of your bond funds and dumped that cryptocurrency bet. If only you’d acted on your hunch that technology stocks were overpriced and ditched them before they tanked.”
That was from an article that discussed “hindsight bias.” It makes us feel that we foresaw the future all along, that what happened was inevitable and “anybody who didn’t see it coming is a dope.”
One year ago, the Wall Street Journal polled its readers asking them to predict what would happen in 2022. 11.6% of those polled predicted the S&P would be down 10% or more. Another 10% predicted it would be down less than 9.9%. 78.4% predicted the S&P 500 would be up this year. 28.4% predicted it would be up more than 10%. These are people who read the Wall Street Journal, so presumably people who pay attention. Only 11.6% got it right! According to Jason Zweig (at the Wall Street Journal) and the research he cites, don’t expect anyone to admit they were part of the 88.4%. A lot of us have opinions, reasonable ones at that, about what will happen in 2023. I wonder how many of us will be right.
Click here to go to that referenced article: WSJ.com |
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| THE FED TALKS, THE MARKETS SINK: The U.S. stock markets were doing quite well through Wednesday. Enter the Fed. On June 15, the Fed got more aggressive and raised the Fed Funds Rate by 0.75% up to 1.75%. Each meeting since it did the same until November 2 when it raised the rate to 4.0%. Most thought the Fed would back down a bit and raise it only 0.5% last week, so markets were prepared, or so it seemed. What the markets were not prepared for was the Fed’s announcement that went beyond telling us about the 0.5% rate rise. Fed officials signaled in its public announcements that this rate will probably rise to 5.1% using smaller increases throughout the spring, and stay there through the end of 2023. Fed officials also stated that unemployment will likely rise and economic growth will be tepid. Mr. Powell said that no Fed officials are talking about cuts in 2023 (many had hoped for this), and that the rates would remain higher until the Fed is confident we are getting back down to the 2% inflation goal. Worries about the Fed pushing us into a recession dogged the markets on Thursday and Friday. |
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| LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices. |
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| U.S. RETAIL SALES DECREASE: In November, retail sales fell by 0.6% from the previous month, but were still 6.5% higher than November of a year ago. |
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| LESS PEOPLE FILING FOR UNEMPLOYMENT: We keep hearing about layoffs, but either those layoffs are not taking place yet, or the laid off employees are getting another job immediately. Only 211,000 people filed new unemployment claims last week, a decrease of 20,000 from the prior week. |
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| THE LEHMAN BROTHERS OF CRYPTO?: When Lehman Brothers collapsed in September 2008, we were all negatively affected. The S&P 500 fell 40% over the next four and a half months and the capital markets struggled, causing panic. Some are calling the FTX collapse the “Lehman Brothers of Crypto.” We’ll see as we await the resulting damage, but it is surely not affecting the broader markets the way Lehman Brothers did. Ultimately, Lehman’s creditors ended up getting about 45 cents on the dollar back. Lehman had assets. John Ray, who has been assigned to take over at FTX in bankruptcy, classifies what went on at FTX as old fashioned, and unsophisticated embezzlement. Many are predicting creditors will get 5 to 8 cents on the dollar when it is all done. |
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| ARE YOU WEALTHY?: Our company name includes the word “wealth.” We are “Stonecrop Wealth Advisors.” We advise on wealth. Interestingly, Edelman Financial Engines recently sponsored a survey, and only 31% of people with $2 million or more considered themselves wealthy. Only 29% of those with $1 million or more considered themselves wealthy. Only 14% with between $500,000 and $999,000 considered themselves wealthy. At Stonecrop, we like to focus on the broader meaning of wealth, the one articulated so well in the movie many of us watch this time of year, when Harry Baily makes his toast to, “My big brother George, the richest man in town.” (If you have not seen this movie, watch it before the year is out, and when Harry delivers that line, tell me if you can ward off that lump in your throat.) Wealth is a broader concept than your current net worth, although that is not unimportant. I know miserable rich people and happy and joyful poor people. The question is, are you wisely using the resources you have, and can develop, to achieve and support the things that are, deep down, the most important and meaningful to you? If you are, then I consider you wealthy. |
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SOMETIMES YOU CAN’T DO IT: I’m an optimist by nature, but sometimes reality gets in the way.
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Our mission is to help you see the objective, find the path, and navigate past the obstacles to a more prosperous future.
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Douglas R. MacGray, J.D., C.F.P. ®
President
Stonecrop Wealth Advisors, LLC
Direct | Cell | Fax
(610) 628 4545
dmacgray@stonecropadvisors.com |
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“Our greatest fear should not be of failure, but of succeeding at things in life that don’t really matter.” Francis Chan
“Plans fail for lack of counsel, but with many advisors they succeed.” Proverbs 15:22
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SOURCES:
THE LEHMAN BROTHERS OF CRYPTO?: advisorhub.com/ftx-is-lehman-of-the-crypto-industry-with-damage-contained-to-sector/
ARE YOU WEALTHY?: edelmanfinancialengines.com/wp-content/themes/EFE_Divi_Child_Theme/images/survey-report/Everyday-Wealth-in-America-2022-The-Intersection-of-Life-and-Money.pdf
U.S. RETAIL SALES DECREASE: calculatedriskblog.com/2022/12/retail-sales-decreased-06-in-november.html
LESS PEOPLE FILING FOR UNEMPLOYMENT: dol.gov/ui/data.pdf |
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| (c) 2022 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved |
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*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.
*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.
*Bloomberg Barclays U.S. Aggregate: This is a measure of the U.S. bond markets. |
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Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.
SDG
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