Impact – Wealth Management


The 2023 Market Recap

We are excited to bring you our market recap for 2023! We know that some of you might already be tempted to hit the “back” button on this blog because you’re thinking “market update? Boring!” But wait! At Impact Wealth Management, we go out of our way to make sure that you understand the things that we’re talking about. We believe that transparency and clear communication builds trust. We wrote this blog with you in mind.

This time last year, about 85% of economists (the people that get paid a lot of money to study the details of our economy and make predictions) were predicting a recession in 2023. It was undeniably an eventful year. While the Federal Reserve (aka: The Fed) was raising interest rates, rising mortgage rates made buying a house a little more expensive and consequently a little less attractive. This slowed down the housing market. Congress flirted with defaulting on the U.S. debt in a headline-grabbing debate over the debt ceiling.

And yet, throughout 2023, and especially in the final quarter, the markets sailed through the headwinds and posted unusually high gains nearly across the board.

If you’re like us and you just love the numbers,…

Morningstar published a fantastic in depth look at the market details of 2023. You can access that article by clicking here.

If you are someone who doesn’t understand all this economic stuff…

We are about break it down for you. Keep reading.

Before we get into specifics, here are some things you should know. If you asked me what kind of pet I have, I would tell you “I have a dog”. (wait, huh? Just hang with me, it will make sense in a minute). That’s helpful to know because now you understand what category of animal my pet falls into. You understand that cats are very different creatures than dogs. But there’s still a lot that you do not know about my pet yet. In order to understand further, your next question is probably going to be “what breed of dog is it?” Knowing the breed will help you understand better what size my specific dog might be and perhaps a little bit about his personality.

In the world of finances, we generally speak about stocks and bonds. Think of them like cats and dogs. They are very different creatures. Knowing only this information helps us frame up what kind of investment we’re talking about. But there are many different breeds of dogs just as there are many different “breeds” of stocks.

The Recap

These first two stats of 2023 will give you a very broad idea of how investments performed (dogs vs. cats).

·    U.S. Stocks rose 26.4%, the biggest rally in the US Market Index since 2019.

·    Core Bonds were up about 5.3% on the year.

Your portfolio is likely a mix of stocks and bonds (dogs and cats). But how well your portfolio performed over this last year really depends on the “breeds” of stocks and bonds you owned. Here is a snapshot of how some of the specific “breeds” of stocks performed.

·    Technology stocks posted a huge year, surging 59.1% for their best performance since 2009.

·    Communications Services ranked second among stock sectors, gaining 54.5%, led by rallies in Alphabet (GOOGL), Meta Platforms (META), and Netflix (NFLX).

·    The so-called “Magnificent Seven” stocks contributed nearly half of the stock market’s overall gain.

·    Large-growth stocks gained 47.3%, blowing away large-value stocks by 36 percentage points—the second-biggest advantage for growth in 25 years.

·    Utilities stocks stumbled, losing 7%—their worst year since 2008—dragged down by higher interest rates.

·    Dividend stocks lagged the broader market. The Morningstar US Dividend Composite Index rose 11%.

As you can see, the different “breeds” had a wide range of performance… from utility stocks, down 7% to technology stocks up 59.1%.

People in the financial world are very interested to know these numbers because it helps them compare the performance of specific investments against the appropriate benchmark. It wouldn’t be fair to compare a cat to a dog. And more specifically, we can’t compare a Yorkie to a Golden Retriever. So every year, we analyze the averages of the different “breeds” against the specific animal (investments) that we own.

What’s this mean to you?

At Impact Wealth Management, we do the analysis for you so that you can spend your time doing things you love (like snuggling with your schnauzer), and we’re here to answer any questions you might have along the way.  We are committed to making sure that our clients understand the general strategies that we use in our portfolios and we don’t automatically assume that you understand “financial speak” just because you’ve been investing for years.

If you’d like to sit down for a chat, we’d love to visit with you!

Impact Wealth Management LLC is a fee-only Registered Investment Advisor (RIA). We are based in beautiful Sioux Falls, SD and regulated by the State of South Dakota. Throughout this site, we went out of our way to present unbiased data believed to be from reliable and respected sources. However, its accuracy, completeness, and relevance are not guaranteed, and no responsibility is assumed for errors or omissions.  Always consult your financial professionals before implementing an investment strategy.  And remember the age old financial advice: past performance is no guarantee of future results.  This blog is also not recommending any specific animal breed over another.  Although, Richelle owns a Standard Poodle, a Golden Doodle, and a Morkie.  And even though dog mom’s aren’t supposed to play favorites, Richelle will admit that her Golden Doodle, Otis, is the best.