{"id":1993,"date":"2024-02-01T13:23:25","date_gmt":"2024-02-01T21:23:25","guid":{"rendered":"https:\/\/mustangprivatewealth.com\/?p=1993"},"modified":"2024-02-01T13:23:26","modified_gmt":"2024-02-01T21:23:26","slug":"2023-year-in-review","status":"publish","type":"post","link":"https:\/\/mustangprivatewealth.com\/2023-year-in-review\/","title":{"rendered":"2023 Year in Review"},"content":{"rendered":"\n
“The Magnificent Seven,” a cinematic triumph in 1960, mirrored the resonance of audience adoration and critical acclaim. Emerging as one of the year’s highest-grossing films, it solidified its place not just as a commercial success but as a cherished Western classic. The film’s timeless narrative of valor, unity, and the fight against adversity struck a chord, earning it a revered status among moviegoers and critics alike. Its ensemble cast, led by luminaries like Yul Brynner, Steve McQueen and Charles Bronson, brought to life a tale of heroism and camaraderie that has endured over the years, cementing its position as an evergreen favorite in the Western genre.<\/p>\n\n\n\n
In 2023, a resonant echo of concentrated leadership emerged in the stock market, akin to the “Magnificent Seven” legacy. This time, however, it wasn’t gunslingers but mega-cap technology companies that took the reins. The new “Magnificent 7,” featuring industry giants Amazon, Apple, Alphabet, Meta, Microsoft, NVIDIA, and Tesla, seized an overwhelming percentage of market gains, propelling the broader market skyward.<\/p>\n\n\n\n
Like the characters in the film, these companies exhibited their prowess and unity, driving innovation and dominating market dynamics. Their collective strength and influence mirrored the unity of purpose seen in the classic film, underscoring a contemporary narrative of market leadership and technological advancement that captivated investors’ attention, much like the cinematic masterpiece captivated audiences of its time.<\/p>\n\n\n\n
The stock market closed out 2023 on a high note, with the S&P 500 climbing steadily for nine consecutive weeks, marking its most impressive weekly winning streak since 2004.<\/p>\n\n\n\n
This surge came as a relief rally for risk assets, buoyed by a resilient economy, subdued inflation, and the Federal Reserve’s indication of ceasing rate hikes while foreseeing potential rate cuts throughout 2024. Despite grappling with a regional banking crisis and ongoing conflicts in Ukraine and the Middle East, the market remained robust.<\/p>\n\n\n\n
The standout performers were the big technology stocks, particularly mega-cap companies like Apple, which soared by 48%, Microsoft with an impressive surge of almost 57%, and Nvidia skyrocketing by a staggering 239%. Driving this surge, the tech-focused Nasdaq Composite closed the year with its strongest performance since 2020.<\/p>\n\n\n\n
Let\u2019s do the numbers:<\/em><\/strong><\/p>\n\n\n\n The year 2023 commenced with gloomy forecasts and recession fears as 2022 was a year investors wanted to quickly forget. But 2023 was a year investors want to never forget, as it culminated in a surge of optimism and robust performance across diverse asset classes.<\/p>\n\n\n\n Yet 2023 was not without its challenges, as Investors navigated through a landscape fraught with suspense and obstacles, including the steepest borrowing costs witnessed in over 20 years, a regional banking crisis, and geopolitical turbulence. However, the economy’s resilience, a trend toward lower inflation, the conclusion of Federal Reserve tightening (hopefully), and the enthusiasm surrounding artificial intelligence (AI) outweighed these challenges, pushing almost all asset classes into very positive territory for the year.<\/p>\n\n\n\n The overall trend for sector performance for each of the four quarters in 2022 and most of the 12 months was volatile, as the performance leaders and laggards rotated all year. And interestingly, the last three quarters of the year saw a mini-pattern develop that investors are hopeful is not repeated in the first quarter of 2024 as:<\/p>\n\n\n\n In addition, the range in 1-year sector-returns was exceptionally wide, with the Information Technology sector leaping more than 60% and the Utilities sector losing more than 10%. That\u2019s volatility.<\/p>\n\n\n\n Here are the sector returns for 2023:<\/strong><\/p>\n\n\n\n Reviewing the sector returns for 2023, we saw that:<\/p>\n\n\n\n Great performance in 2023 was not confined to the U.S., however, as global markets also turned in a positive year. In fact, of the 36 of the developed markets tracked by Morgan Stanley Capital International (MSCI), all of them were positive, with 33 of the 36 turning in double-digit gains (incidentally, in 2022, 35 of the 36 indices recorded double-digit losses).<\/p>\n\n\n\n And it was almost as good for developing markets, as 30 of the 40 developing markets tracked by MSCI turned in positive numbers in 2023, with most gaining less than 10% (in 2022, 30 of the 40 indices lost more than 20% and many markets in Eastern Europe lost more than 70% in 2022).<\/p>\n\n\n\n The following shows the range of 2023 returns from markets around the world:<\/p>\n\n\n\n 2023 was positive for most investors, and as is usually the case, asset class and style did play a role in determining one\u2019s overall total performance returns. For the year, Growth (+37%) trounced Value (+12%) and the mega-cap names (especially those Magnificent 7 ones) trounced the smaller-cap names.<\/p>\n\n\n\n The significant relief from inflationary pressures played a pivotal role in fostering positive market trends, offering a respite for both the Federal Reserve and the economy. After reaching its pinnacle at 9.1% in June 2022, the Consumer Price Index (CPI) underwent an impressive decline, slashing by two-thirds. This dramatic reduction firmly solidified disinflation as the prevailing theme defining the landscape of 2023.<\/p>\n\n\n\n In fact, according to U.S. Labor Department data published on Dec. 12th<\/sup>, the annual inflation rate for the United States was 3.1% for the 12 months ended November (final 2023 inflation data will be released in January 2024).<\/p>\n\n\n\n <\/em><\/td> Close<\/em><\/strong><\/td> 2023<\/em><\/strong><\/td><\/tr> DJIA<\/td> 37,690<\/td> 13.70%<\/td><\/tr> S&P 500<\/td> 4,770<\/td> 24.20%<\/td><\/tr> NASDAQ<\/td> 15,011<\/td> 43.40%<\/td><\/tr> Russell 2000<\/td> 2,027<\/td> 15.10%<\/td><\/tr> MSCI EAFE<\/td> 2,236<\/td> 15.00%<\/td><\/tr> Bond Index*<\/td> 2162.00<\/td> 5.10%<\/td><\/tr> 10-Year Treasury<\/td> 3.90%<\/td> 0.30%<\/td><\/tr><\/tbody><\/table> 2023 Versus 2022 \u2013 A Tale of Two Years<\/h2>\n\n\n\n
Sector Returns in 2023<\/h2>\n\n\n\n
S&P 500 Sector<\/td> 2023<\/td><\/tr> Information Technology<\/td> +60.32%<\/td><\/tr> Energy<\/td> -3.16%<\/td><\/tr> Health Care<\/td> +1.02%<\/td><\/tr> Real Estate<\/td> +9.50%<\/td><\/tr> Consumer Staples<\/td> -2.22%<\/td><\/tr> Consumer Discretionary<\/td> +44.25%<\/td><\/tr> Industrials<\/td> +16.99%<\/td><\/tr> Financials<\/td> +11.19%<\/td><\/tr> Materials<\/td> +10.55%<\/td><\/tr> Communication Services<\/td> +58.46%<\/td><\/tr> Utilities<\/td> -10.46%<\/td><\/tr><\/tbody><\/table> Markets Around the World Performed Great in 2023 Too<\/h2>\n\n\n\n
Index Returns<\/strong><\/td> 2023<\/strong><\/strong><\/td><\/tr> MSCI EAFE<\/td> +15.03%<\/td><\/tr> MSCI EURO<\/td> +22.18%<\/td><\/tr> MSCI FAR EAST<\/td> +12.77%<\/td><\/tr> MSCI G7 INDEX<\/td> +22.97%<\/td><\/tr> MSCI NORTH AMERICA<\/td> +24.45%<\/td><\/tr> MSCI PACIFIC<\/td> +12.07%<\/td><\/tr> MSCI PACIFIC EX-JAPAN<\/td> +2.06%<\/td><\/tr> MSCI WORLD<\/td> +21.77%<\/td><\/tr> MSCI WORLD EX-USA<\/td> +14.77%<\/td><\/tr><\/tbody><\/table> Asset Class & Style Performance<\/h2>\n\n\n\n
Index Returns<\/td> 2019<\/td> 2020<\/td> 2021<\/td> 2022<\/td> 2023<\/td><\/tr> Global REITS<\/td> +24.4%<\/td> -10.14%<\/td> +32.6%<\/td> -23.7%<\/td> +10.9%<\/td><\/tr> Value<\/td> +22.7%<\/td> -0.4%<\/td> +22.8%<\/td> -5.8%<\/td> +12.4%<\/td><\/tr> DM Equities<\/td> +28.4%<\/td> +14.1%<\/td> +22.3%<\/td> -17.7%<\/td> +24.4%<\/td><\/tr> Growth<\/td> +34.1%<\/td> +34.2%<\/td> +21.4%<\/td> -29.1%<\/td> +37.3%<\/td><\/tr> Commodities<\/td> +7.7%<\/td> -3.1%<\/td> +27.1%<\/td> +16.1%<\/td> -7.9%<\/td><\/tr> Global Agg<\/td> +8.8%<\/td> +9.2%<\/td> -4.7%<\/td> -16.2%<\/td> +5.7%<\/td><\/tr> Small Cap<\/td> +26.8%<\/td> +16.5%<\/td> +16.2%<\/td> -18.4%<\/td> +16.3%<\/td><\/tr> MSCI EM<\/td> +18.9%<\/td> +19.8%<\/td> -2.2%<\/td> -19.7%<\/td> +10.3%<\/td><\/tr><\/tbody><\/table> Inflation Retreated in 2023<\/h2>\n\n\n\n