Market Commentary 2/23

Wow, what a start to 2023!!  After an extremely challenging year, we are seeing a very different type of market as we shed some of the concerns that drove the market lower in 2022.  Inflation is cooling, the Fed is nearing the end of its rate hike cycle, China is coming to its senses, and Europe seems to be managing through the winter with the conflict in Ukraine.

Investors who held in there are starting to see some recovery after the carnage of the last 12 months.  The last year though has really been a tale of two halves;

1. The first six months of 2022 were nothing but a straight slide down.  Everyday we saw more red and continued declines.
2. The last 6 months of 2022 were choppy, but generally flat.  The real turning point was a slight tick down in inflation, and from there, the market tried to see past the economic weakness, Fed policy, and other difficult headlines that seemed to roll in every week.

With the big rally we saw in January, the last 6 months are starting to look downright good.  I know that sounds crazy, but the numbers don’t lie.  And with market strategists at major financial institutions still predicting a difficult year for markets, it begs to wonder if the recent strength can hold together or if we are just setting ourselves up for another slide down.

And there lies the main question on every investors mind; are we going to see a bounce back in the market in the near term, or are we going to have a prolonged downturn that continues to turn account values and stomachs.

We at Green Ridge are bullish!  “Why?”, you might ask.  While we don’t have a crystal ball, we do have eyes and ears.  What we see is more and more indices, sectors, and individual stocks starting to develop bullish patterns and upward momentum.  Take a look at the general technology sector.  Beat down over 27% last year and up almost 10% on the year.  What we hear is continued skepticism from wall street professionals.  That contrarianism is just the same as when markets are boiling over.  It goes too far before all the institutions that are currently skeptics become frantic buyers if they have a change of heart and move to the bull camp. Both of these things can change on a dime, but history has taught us to trust our eyes more than our ears. 

So, what do you do?  We think it always makes sense to remain level headed and stick to your long term strategy.  There are opportunities in the market right now all over the place, and while all of those opportunities might not make sense for you given your risk tolerance and time horizon, we see a solution for all types of investors.  If you are having trouble seeing them, or feel like you want to learn more about what we are seeing and why we feel so optimistic, give us a call!  We love gabbing about this stuff!!!

Hang in there, and know that there are brighter days ahead.  Maybe not tomorrow, but then the day after that!