Financial Planning Fridays #21: 2023 Outlook

Today we wanted to give you three reasons that we are so optimistic for 2023.

Twenty-twenty two was one of the worst years ever for the financial markets. In fact, the S&P 500 had the fifth worst return it has had in the past 90 years. However, if you are a client of Presilium Private Wealth, your portfolio was diversified and rebalanced, and you likely did much better than this, leaving us in a great position heading into 2023.

Three reasons that we are so optimistic for 2023:

The first is a very powerful historical trend. We are now in year three of the Presidential election cycle. Historically, since 1933, this has been the best performing year in our four-year election cycle with an average return of 20.2%. Furthermore, in year three of those 22 previous election cycles, the S&P 500 has been positive 21 times and the only negative year was 1939 when the index lost only 1.1%!

This chart shows the average return for the S&P 500 for each year in the Presidential election cycle over the past 90 years. Year two, which we just completed, has been the worst year, and, as you can see, year three has been by far the best year.

The second reason we are so optimistic going into 2023 is stocks have historically done well in the 12 months following a significant peak in inflation. The year-over-year inflation rate in the U.S. recently peaked in June 2022 at just over nine percent. The total return of the S&P 500 has averaged just over 13% for the 12 months following inflation peaks since 1950 and has had a positive return 11 of those 13 times.

Finally, the third reason to be optimistic this year is the markets have a historical tendency to bounce back after a significant down year.

This chart shows the four years with an even worse return than 2022 over the past 90 years, and the subsequent return the following year. The market was positive all four times with an average return of about 30%!

We are very optimistic going into 2023. We are excited to work on your behalf and take advantage of whatever the world and market bring us this year, and continue to give you an amazing experience! Presilium will continue to produce at least one video per week on the topics we feel are most important to you, our incredible clients. We also have a number of very special in-person and virtual events scheduled for this year and can’t wait to spend even more time together.

We would love the opportunity to serve your friends, family, and colleagues in the upcoming year. Thank you for continuing to introduce us and connecting us to more wonderful people like you. We hope that 2023 is your best year yet!

Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.

Forbes – The Presidential Election Cycle And The Stock Market: A Classic Calendar Anomaly
Stocks Reap Double-Digit Returns After Inflation Peaks, History Shows
10 Year Treasury Rate – 54 Year Historical Chart | MacroTrends
S&P 500 Index – 90 Year Historical Chart | MacroTrends
S&P 500 PE Ratio – 90 Year Historical Chart | MacroTrends
Time, Not Timing, Is What Matters | Capital Group
Does Market Timing Work? | Charles Schwab