A Good Year!

January 23, 2024

ASI Wealth Management Q4 2023 Quarterly Letter to Clients

One of my favorite movies is “A Good Year,” starring Russell Crowe. I love the story and the journey that Russell’s character embarks upon. Learning about oneself, what is important, how it changes as we go through life, and the magic of relationships. If you have not seen the film, I highly recommend it!

2023 was a good year for the financial markets! After a very disappointing and painful 2022, where stocks and bonds delivered double-digit negative returns, to see how quickly markets turned in late ‘23 was not anticipated by many, but it was a welcome result.

Stocks, as measured by MSCI All World Index advanced 21.6%, and bonds, as measured by the Barclays Aggregate Bond Index advanced 5.2%! As we finished 2022, there were not a lot of pundits predicting strong financial performance in 2023, and rightfully so. We had major geopolitical conflicts, a US Banking crisis, and deteriorating fiscal health for many countries. Yet, results in 2023 were amazing.

Many of you may recognize the charts below. We have shared these charts many times over the years as they are great reminders that to be successful investors, we must ignore the noise, and stay focused and disciplined so that we can capture the financial markets’ returns over time.

The first chart shows that, historically, some of the best markets have followed some of the worst periods of performance. This is exactly what we saw in 2023. We had a very difficult 2022. If you did not stay the course and you raised cash and sold stocks and bonds due to the difficult market conditions, your returns in 2023 would not have been nearly as good as they should have been if you stayed the course.

The second chart illustrates how quickly markets move. If you were invested in US stocks through October of 2023, your results were not very exciting. The Russell 3000 Index was up 9.41% through October. Things changed quickly in November and December with the same index rallying to more than double that return, ending the year up 25.96%. The financial markets are telling us we must stay invested to ensure we get these amazing days, weeks, and months of market performance. If we do not stay invested during times of market turmoil, our performance as investors would be vastly lower than the actual market's historical rate of return. So, looking at the chart below, you can see how much your return can be impacted if you miss the best days in the market, which often follow some of the worst days in the market.

Over the course of my investment career, I have met with many investors who have lamented that they have never achieved anything close to the historical rates of return the financial markets have delivered. This is not surprising given investor behavior and the lack of staying invested. On top of this challenge, you can add the effect of picking the wrong manager or advisor and their ability to detract from your performance, as well as the effect of paying higher fees than necessary to access investment solutions that can assist you in achieving your financial goals. We were thrilled to see the 2023 financial market results and if you have not looked at your statements in a while, given the negative returns of 2022, you will be pleased when you see the results that 2023 delivered.

We value the relationships that we have formed with all of you over the years, and we will continue to work diligently to assist you in achieving what is most important to each of you. As always, thank you for the trust you place in us, we do not take this responsibility lightly. Here is to an amazing 2024 for all of us!