By Allen Giese, ChFC®, ChSNC®, CLU®

We finished up 2022 and entered 2023 with no shortage of dire predictions about where markets were headed. As we start the second quarter, I find myself asking, “Why hasn’t it gone down the way it was supposed to?” The world certainly put on a horrific show in the first quarter. The carnage in Ukraine continued, China persisted in threatening armed hostilities against Taiwan, bank failures were a thing again, and we witnessed the inevitable death of Credit Suisse in real time.

On top of all this, the Fed continued engineering the sharpest rate spike on record. Google-search “2023 market predictions” and it’s no wonder you find that the most avid quoted forecasters have confidently predicted a crash to new lows, driven by lower corporate earnings. But facts, as John Adams famously observed, are stubborn things. And here, I’ll cite two.

First, the stock market itself. It came into the year at around 3,840 on the S&P 500. Since then, we’ve had no shortage of negative developments. Yet as I write this in mid-April, we’ve closed 6% higher. From everything I read and hear, this shouldn’t be happening.

Second, the consensus earnings forecast for these great companies remains flat at $220 and still refuses to give much ground. True, estimates are a bit lower than they were three months ago, but if full-year earnings are going to plunge to the predicted neighborhood of $195 (per Morgan Stanley’s team), then a whole lot of things need to start going really wrong, really soon. It could happen, I guess, but …

One of the most important lessons I’ve learned in 30-plus years of managing client wealth is that there is a world of difference between the relentless long-term success of global capital markets and financial reporting of the same. A successful lifetime investment experience requires us to focus on the former and tune out the latter. That’s a discipline that we, as your advisor and wealth manager, are uniquely equipped and qualified to help you with.

The aforementioned data points may not mean anything at all. And they may mean bad stuff is still coming, just on a longer lag. But to me, holding any meaningful part of one’s core capital in cash, waiting for the other shoe to drop, remains a very high-risk strategy.

As always, we deeply appreciate the trust and confidence you’ve placed in our team here at Northstar Financial Planners and urge you to call us if you have any questions or concerns—or even just want to talk! Until next time …