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Winter 2023 Market Quarterly

Barron Financial Group Keeps Growing

We are very excited to tell our clients about recent changes we have had here at Barron Financial Group. To start, we have recently hired a new advisor, about whom we are very excited. His name is James Fisher, and he goes by James, which makes dealing with another Jim in the office much easier. James came to us after a short time with another advisory firm, so he brings a degree of experience and has a very strong connection to his local community of Burlington, CT. We are happy to have James on board and wish him all the best in his endeavors. 

Second, with James and our partner John living in Burlington, we’ve decided to open a satellite office there. Our space in Torrington is small, and John and James are making contacts closer to Hartford, making the Burlington office more convenient. We’re located on Spielman Highway, so if you’re in the area, please stop by and say hello.

Annual Charitable Contribution

As we have done for many years, Barron Financial Group contributed to the Northwest Connecticut Community Foundation instead of sending Holiday gifts to clients. As in previous years, we pledged $25 per PM client household for a total contribution of $3,550 for 2023. We started these annual contributions to the Foundation in 2009 and have donated over $27,500 to this great organization. For privacy purposes, client names will not be disclosed. From Sandra, John, James, and me, we hope you and your families had a terrific holiday season and that this new year brings happiness, health, and prosperity.

Q4-2023 Market Results

What a difference a quarter makes. Most of 2023 was a tough year for investors. However, the markets had a major turnaround in November. For the quarter, the S&P 500 was up +11.69% and up +26.29% for the year. International markets were also strong at +10.10% for the quarter and +15.04 for the year. Emerging markets were a bit less impressive at +7.45% for the quarter and +7.04% for the year. Intermediate bonds were also up at +6.82% for the quarter and +5.53% for the year. Short treasuries were also up at +2.53% for the quarter and +4.23% for the year.

Taking a closer look at the markets, we see the S&P 500 had a nice run from late March through the end of July when the hope of a “Soft Landing” (i.e., breaking inflation without a recession) was all the hope. Then came the unusual 3-month S&P market slide in August, September, and October that brought the market back down to levels not seen since late March. During this time, conservative investors continued to get punished as the bond market performed even worse than the S&P 500. After a bumpy start the bond market slid through the end of October, getting to levels not seen since October 2022. Then November hit with a Federal Reserve (Fed) meeting with no interest rate increase and a more optimistic tone about inflation. Then, we had some positive Consumer Price Index (CPI) readings, and the markets started recovering. A shift was underway; more on that below.

Q4-2023 Notes

We believe this major shift in November is entirely due to the fact that the market narrative changed. During the down months of August, September, and October, the general feeling was that inflation was not coming down fast enough, more interest rate increases were coming, and interest rates were going to be higher for a longer time. All of those things are bad news for markets, especially the bond market, which got hit worse than stocks. Then, in November, the Fed had a press conference after its meeting, and the message was that inflation was improving and there may not be more interest rate increases. Current high interest rates were going to stay for at least a while. 

Next, we had some positive CPI readings, and this, along with the Fed comments, was enough to get investors more interested in risk assets like stocks. Then came the December Fed meeting, where they not only said that inflation was improving but that they felt more confident that we may not see more interest rate increases. They even went so far as to discuss when interest rates might start coming down. This was a huge victory for markets, and stocks and bonds responded accordingly. The December Fed meeting made the ”Soft Landing” idea much more likely.

Not a lot of room left here for our normal global news topic. But, that’s OK, we can pinch hit and offer up something we hope is useful. For today, that topic will be “Thinking About the Investment Long-Term”. The question is, after 1-1/2 years of bear or slow markets, how do we look back and think about this experience more positively?  We feel that 2022 was a tough year, and a good part of 2023 wasn’t much better, and we understand how frustrating that is for investors. But, let’s take a longer-term view, starting with the S&P 500, which is a great baseline for investments in the United States. If we go back six years to 2018, the S&P 500 returned -4.38%. Not a great year by any means, or even a good one, but also not a disaster. Then, in 2019, the S&P returned +31.49%, so if you were invested for those two years, you were way in the green (profit zone). Then in 2020, the S&P returned +18.40%; now, if you’ve been invested for three years, you were even further in the green. In 2021, the S&P 500 returned +28.71%. Yep, even further in the green if you were invested for those years. Then came 2022, and the S&P was down -18.11%. Ouch. But even if you had only been invested for the two years of 2021 and 2022, you were in the green from the 2021 returns. Then we finished 2023 at +26.29%, again in the green if you were invested for only those two years of 2022 and 2023. If you were invested longer than two years, you were well into the green. The point here is that the S&P 500 has more good years than bad, and we have to remember that to help us get through tough years like 2022. We know it’s difficult, but long-term thinking makes sense when it comes to investing.

Barron Financial Group, LLP is a fee-only Registered Investment Advisor regulated by the Securities and Exchange Commission.

This newsletter is for general information only and should not be considered investment advice.  Investors should consult with a trained investment professional to discuss their particular situation.

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