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December & Year-End 2023 Market Perspectives

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January 8, 2024

There are typically two outcomes as to what happens after an awful year like 2022 – you get a bounce-back recovery, or the misery continues. Luckily, 2023 was the former not the latter. Going into the year, I expected returns would be higher and actual returns followed suit.

As we headed into 2023, the elephant in the room was the notion of this inevitable ‘recession’ and the only thing investors had left to debate was whether it was going to be a ‘hard’ or ‘soft’ landing.  

While not completely dismayed, that discussion point has lost quite a bit of its steam as inflation has been steadily declining, rate hiking has perhaps concluded all with the backdrop of a strong labour market and resilient corporate earnings.

With the ‘recession’ fear not playing out or hitting the same chord, the year found other topics to help fill the news cycle out to provide no shortage of market moving disruptions. As early as mid-March the U.S. regional banking crisis sparked similar fears of 2008. The year also included a U.S. credit rating downgrade, fears of a government shutdown, various union strikes, and most unfortunately - renewed conflict in the Middle East. That’s just to name a few. Reality is all these events are something I would label as ‘noise.’

To put in perspective and to be fair, this ‘noise’ happens every year, it just sounds different. We are wired emotionally to believe that whatever is happening in this moment though is unique. The ease of access to news, and media platforms has only magnetized this mindset.

Experience has helped me understand that this ‘noise’ serves only as a temporary distraction from letting markets work efficiently focusing on what really matters.

Despite the ‘noise’ or scary headlines, the only thing that moved the needle and mattered to investors sentiment daily was this continued tug-of-war between rates and inflation as it provided lots of twists and turns.

As the month of October was quickly coming to a close, with investor sentiment at historically low, alarming levels and a rather lacklustre performance for the year, what many did not see coming was a spectacular rebound ready to erupt. The final two months of 2023 turned an eventful calendar year into a beautiful success for virtually all investors as stocks, bonds, and even cash posted appreciable gains over the period. Quite the contrast after 2022.

The economic environment provided anything but smooth sailing for investors in 2023 and reaffirming, once again, that this investment stuff is not for the faint of heart.

In this year-end wrap up we have a lot to cover. While I document and bring to light the current topics of the day throughout the year in my monthly newsletters, I thought it might be best to stick to a more visual approach for this special edition. In other words, I have packed this issue with lots of client friendly charts.

I hope you find this special year-end edition insightful. Click on the attached.

In closing, I sincerely appreciate you taking time out of your busy day to stay informed and please understand I am here for you every step along the way in 2024 and beyond in your investment journey. Should you have any questions regarding your portfolio or any aspect of your planning, please do not hesitate to contact my office as creating well educated and informed investors continues to be the hallmark of my practice.

With Thanks,

Aaron Pedlar

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