Too Hot? Too Cold? Just Right? – March ’23 Update

Here is a recap of market performance for March and year-to-date:

In March, market performance varied widely based on asset class. US small cap stocks declined significantly, while large cap stocks, international stocks, and bonds increased in value. For the year, all four asset classes have managed positive returns despite bouts of market volatility.

Too Hot? Too Cold? Just Right?

Ohio weather is notoriously fickle, especially this time of year. It’s not uncommon to have snow, rain, and a beautiful sunny day all within 48 hours. Right now, predicting economic conditions is much like predicting Ohio weather. For the past year, economic conditions have been running hot, with high inflation and interest rate increases. But over the past few weeks, starting with the collapse of Silicon Valley Bank, an economic cold front has blown in. While worries about inflation have not totally dissipated, investors are increasingly worried about a coming recession. Memories of the financial crisis in 2008 and Covid in 2020 are still fresh in many minds, and not particularly pleasant.

What’s our policy in an uncertain environment like this? Balance.

  • Balanced thinking – The current situation is not all that different from normal. We never know precisely what the future holds. Maintaining an open mind about the future keeps us flexible and able to adapt to whatever happens next. In other words, we don’t have to predict the future to have investment success.
  • Balanced portfolios – The investments that perform well during a recession performed poorly during periods of high inflation. The reverse is also true. Maintaining a balanced portfolio is the best way of navigating periods that seem murkier than normal. Over-allocating money to any one investment leads to more volatile outcomes.
  • Balanced temperament – Emotions are good and natural, but they can be destructive drivers of investment decisions. Whatever happens in markets, there are ways to take advantage of the situation. These usually depend on your unique financial situation and stage of life.

The same way you probably have a jacket, an umbrella, and sunglasses in your car in the spring, a balanced approach to investing keeps you prepared for whatever the market does. Thank you for the trust you put in our team, regardless of the weather. If you would like to talk specifically about your current situation, please let us know.

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