Trisha's Thoughts



Trisha shares her thoughts on the markets, either about specific events that are happening or the market in general. Please check back regularly for new content. 


Cup of coffee and book in the summer sunlight


Quarter Four 2023 Update

“It’s not the Destination, it’s the Journey.”

Ralph Waldo Emerson

Santa Claus came through once again and delivered a rally in the final quarter of 2023. While the seven mega-cap technology stocks known as the Magnificent 7 certainly continued to move higher, the bull market broadened as we had hoped it would, resulting in a wide range of stocks benefiting and moving strongly upward in November and December. Even bonds joined in, with continued improvement in inflation numbers leading to the best month of performance for bonds in decades and bringing returns for the bond market, as represented by the Bloomberg Aggregate Bond Index, to 5.53% for the year, solidly ahead of what cash earned.

Interestingly, while the bond market still has not fully recouped the decline it experienced in 2022, the broad US stock market, as measured by the S&P 500 index, has made almost a complete round trip, ending 2023 very close to the same level where it started 2022. That is nice to see but there is more to understand about the last two years in the stock market.

In my letters the last couple of quarters I have talked a lot about the disparity between performance of the Magnificent 7 and the other 493 stocks that make up the S&P 500 index. While that spread continued throughout 2023, with the Magnificent 7 gaining an average of 76% for the year and the other 493 diversified stocks gaining an average of 13%, that is just half of the story. If you look at those same two baskets of stocks over two years, from January 1st of 2022 to the end of 2023, you will see that both groups on average basically made the same round trip, getting back close to their starting point. But the journey they took to get to that destination was incredibly different.

I have included two graphs prepared by Goldman Sachs Asset Management that I think do a great job of illustrating these points for us. One shows the performance of these groups of stocks for just 2023 – with the Magnificent 7 clearly leading the charge – but the other shows the same groups over both 2022 and 2023. As you can clearly see, the Magnificent 7 weren’t so magnificent in 2022, with their average stock price falling dramatically while the average of the other 493 stocks in 2022 dipped much more modestly. Ultimately both groups ended up around the same place but I’m glad that we chose to remain more diversified for our clients, resulting in a much less volatile journey.

Heading into 2024 the economy seems to be on track to return to what I would describe as pre-Covid normal. Clearly unexpected circumstances can change the trajectory, and the markets are watching geopolitical tensions closely, but it feels like an environment where good quality investments can be rewarded.

As we review and rebalance portfolios this quarter, we will continue to strive to balance risk and return, targeting our standard mix of various asset classes.  In all economic environments we believe in the importance of diversification, the value of a regular strategy of rebalancing and the contribution of income toward total return.  We continue to view cash as important in accounts distributing income, but also appreciate the longer-term opportunity that bonds can provide.

Please do not hesitate to call us if you have any questions or would like to discuss your account or the marketplace in general.  We are always happy to hear from you.



Trisha Arndt

Goldman Sachs Charts

Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict.  Past performance is not indicative of future results.  All indices are unmanaged, and investors cannot invest directly into an index.  Diversification does not ensure against market risk.