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Navigating the Waves of Change: 2023 Review and 2024 Outlook

originally published on February 26, 2024

2023: A Year of Reward for the Disciplined


The past year has been a testament to the enduring value of patience and discipline. Amidst a backdrop of volatility, the S&P 500 demonstrated a remarkable recovery, surging by 26.3% following a decline of 18.1% in the preceding year. This turnaround underscores the cyclical nature of markets and the critical importance of staying the course.

Yet, a closer look at 2023 shows it was far from a smooth ascent, there was considerable volatility putting investors' resolve to the test:

  • Early Optimism: The year kicked off with a robust 8.98% climb from January 1 to February 2, reacting positively to a sign that the Fed’s rate hikes where cooling.

  • Spring Setbacks: A subsequent dip of -6.43% between February 3 and March 10 from banking turbulence.

  • Mid-year Momentum: From March 11 to July 28, an impressive rally of 19.37% highlighted the rewards from robust big-tech earnings.

  • Late Summer Lull: A sharp -9.81% fall from July 29 to October 27 showcased the ongoing volatility from stubborn inflation, labor market worries and geopolitical strife.

  • End-of-Year Surge: The year concluded on a high note with a 16.23% increase from October 28 to December 28, attributable to the release of positive third-quarter economic data and unexpectedly strong corporate earnings, along with a resilient jobs market and softened inflation, this led to improved consumer spending, economic growth, and a swift uplift in investor confidence following the Federal Reserve's neutral policy stance.

The last two years, with their unexpected turns in economic data, earnings reports, and geopolitical events, have underscored that success in investing doesn’t hinge on making accurate forecasts and predictions. Instead, it emphasizes the importance of patience, allowing investments the time they need to mature, and the discipline to adhere to a well-considered investment strategy and principles, no matter the state of the market.


The Pitfalls of Market Timing


2023 served as a poignant illustration of the challenges inherent in market timing. An analysis by BlackRock revealed that retail investors (those without financial advisors) often made decisions counterproductive to their interests. Many were net sellers in the initial half of the year, missing out on the S&P 500's 17% gain by June 30. A misguided attempt to re-enter the market in the summer preceded an 8% fall, further compounding their missteps. In stark contrast, clients of IIM remained steadfast, avoiding the pitfalls that ensnared many and enjoying the superior outcomes of staying invested by year-end.


Looking Ahead: The 2024 Outlook


As we pivot to 2024, the horizon appears promising for both stocks and bonds, with cash poised to underperform in comparison, with the anticipated easing of inflation and strategic rate cuts by the Federal Reserve. For stocks, resilient economic growth may serve as a robust tailwind, while bonds could benefit from a decline in interest rates ahead of the Fed's actions. Conversely, the forecasted rate cuts suggest that cash holdings may yield diminishing returns, making them a less attractive option – it may be suboptimal to hold any cash in excess of your emergency fund.


Crafting the Optimal Portfolio


At our core, we advocate for a holistic approach tailored to each client's unique financial goals. Our optimal portfolio construction is in alignment with our values by utilizing four key strategies:


  1. Personalized Risk Allocation: Tailoring investment strategies and allocations to align with individual goals and risk tolerance.

  2. Diversified Public Equities: Leveraging low-cost ETFs to spread risk and capture growth across various sectors, with systematic rebalancing.

  3. Innovative Exposure: Investing in AI, emerging technologies, and credit opportunities through select private funds, where appropriate.

  4. Cryptocurrency Strategy: Offering exposure to the potential of blockchain through a diversified large-cap crypto strategy, where appropriate.



As we reflect on 2023, the investment landscape reveals a year marked by resilience, recovery, and the reaffirmation of timeless investment principles. The remarkable turnaround of the S&P 500, amid fluctuating market conditions, emphasizes the enduring value of patience, discipline, and strategic foresight in navigating the complexities of investing. The past year's volatility not only tested investors' resolve but also highlighted the pitfalls of market timing, showcasing the superior outcomes for those who remained steadfast in a solid investment strategy. Looking ahead to 2024, the investment outlook appears promising, underscoring the importance of crafting an optimal portfolio that aligns with individual goals, diversifies across sectors, and embraces innovation. We remain committed to guiding our clients through the waves of change, leveraging our expertise to harness the potential of the markets, and ensuring that their financial journey is both successful and aligned with their aspirations.





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