Broker Check

First Quarter 2023 Commentary

Prior to 2022, stocks and bonds had not posted negative double-digit returns (in the same year) since 1926. Although painful at the time, history shows us it doesn’t happen often.  In general, when investors move out of stocks, they move into bonds as a safe haven, which balances out the net return in a diversified portfolio. However, when several key factors are challenged at the same time, it can cause havoc on both sides of the portfolio.

Looking ahead to 2023, all eyes are on inflation and interest rates and how they will affect jobs and economic growth.  The Federal Reserve Chairman, Jerome Powell has taken an aggressive stance against inflation, much like a doctor treating cancer. He has injected several large doses of chemo (interest rate hikes) to attack the cancer in the U.S. economy (inflation). For the most part, it has worked because the patient (the U.S. economy) has been relatively healthy up until this point. The cancer is shrinking, but not without side effects (adverse consequences) that would make the patient feel worse (recession) before it gets better.

When new economic data is positive, it shows the patient is resilient and can tolerate more chemo. Thus, treatment continues. If the patient starts to wane, it could trigger the Federal Reserve to stop treatment as soon as possible. In the meantime, the patient is under observation with optimism and anxiety until the treatment provides more conclusive results.

To navigate risk, we feel the bucket strategy works best in this situation. For our short-term cash bucket, we are picking up CDs at attractive rates.  In our mid-to-long term buckets, we are paying particular attention to quality.  If you want to see how your risk tolerance or financial circumstances fit into this strategy, please let us know.  The value of our advisory services is enhanced when we actively work with you to accomplish your financial goals and objectives. 

In closing, we are required to notify you when we update our disclosure brochure, ADV Part 2A and 2B. Please be advised no material changes were made. Our services, fees, and the way we do business will remain the same. If you’d like to review our ADV Part 2A & 2B, you can download a copy from the Disclosures menu on our website or visit the SEC public access site at You can also call our office at 925-553-7200 to request a free copy.