The Right Questions to Ask – April ’23 Update

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

In April, market performance was mixed. International stocks and US large caps had positive returns, while bonds were also up. US small stocks declined. For the year, US small stocks are relatively unchanged while the remaining three asset classes are higher.

The Right Questions to Ask

Despite positive investment performance so far this year, there seems to be a cloud of negativity hanging over the political, economic, and financial landscape. Over the past weeks, we’ve found ourselves grappling with questions like:

  • Will the banking system collapse?
  • Is the US dollar going to decline in relevance or even disappear?
  • What happens if China invades Taiwan or Russia uses nuclear weapons?
  • Will inflation remain stubbornly high?
  • Is the economy going to enter recession or even depression?

Sometimes it seems like the world is more perilous or dangerous than normal – as if it’s just hanging on by a slowly-fraying thread. But if we look to the past, we find that scary news headlines are the investor’s constant companion. Consider the following graph:

You probably remember several of these events: the US Treasury credit downgrade, Brexit, or the government shutdown. All of them, like most news, start out sensationally and then slowly fade over time.

The power of the graph lies in both its acknowledgement of bad news, times of poor market performance, and the insistence that persistent, long-term investing is worthwhile and rewarding. In times of obvious uncertainty, we should also ask the following questions:

  • In total, will companies continue to innovate better products and services?
  • How likely is it for corporate profits to increase over the next decade?
  • Will parents continue to work for a more prosperous life for themselves and their children?
  • Is it probable that consumers will continue to spend money on things they enjoy?

It is our job to recognize both the risks of investing and keep you realistically optimistic about the future. Every day, we encounter the unknown. It’s important that we can navigate turbulent times and recognize that there is a great chance that the future will be better than today.

Thank you for the trust you put in our team. If you would like to talk specifically about your current financial situation, please let us know.

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