Portsmouth, NH Waterfront

As we entered 2023, we asked ourselves; “What could go right?” After a tough year for stocks, bonds, and growth assets in 2022, it was important to start looking for opportunities. The S&P 500 ended 2023 up 26.3%, while the Bloomberg US Aggregate Bond Index ended the year up 5.5%. This was a dramatic positive turn of events.

At the end of calendar year 2022, bear market sentiment became extreme. Responders to the American Association of Individual Investors survey reported the lowest bullish reading in history, going back to 1987. Shortly after the start of 2023, the twelve-month moving average of bullish sentiment hit the lowest reading on record at 25%. This proved to be fertile contrarian ground and helped lead to a strong counter-trend rally.

The sharp rise in interest rates in 2022, despite being expected to continue into 2023, offered opportunities investors had not seen for a number of years. While higher interest rates can negatively impact the value of stocks, the impact is more pronounced for long-maturity bonds and for growth stocks, which typically realize cash flows over an extended period of time. Eventually interest rates rise enough to slow economic growth, which in turn can have a positive impact on companies that are growing at an above average rate. This is one of the many factors that “went right” in 2023.

Cheaper valuations, declining growth expectations, and projected peaking of interest rates helped contribute to a strong year for growth-orientated equities in 2023. The Nasdaq (growth equity index) ended 2023 up 44.6%, well above the S&P 500 (core equity index). While it may be easier to ask oneself; “What could go wrong?” when challenges appear everywhere, we encourage investors focus on “What could go right?”.

To read our full market commentary, please click here: CMH Wealth Newsletter 2024

If you have any questions, please feel free to contact us or schedule a conversation.


This post is not an offer or a solicitation to buy or sell securities. This may not be construed as investment advice and does not give investment recommendations. Any opinion included in this report constitutes the judgment of CMH Wealth Management, LLC as of the date of this report and are subject to change without notice.

Additional information about CMH Wealth Management is also available on the SEC’s website at www.adviserinfo.sec.gov. Past performance is not a guarantee of future results.