January 2023

January 02, 2023

Happy New Year!  Here is to a better year than 2022.  We ended the month and the year on a very weak note, and I’m not very positive about it. We just had the worst year since the Great Recession and a market that has been wrestling with shock after shock. I’m not going to try and do what many other news blogs and futurists do and predict market events over the next 12 months, but I will be hypothesizing on some of the major issues that will impact the market.

1) The Russo-Ukraine War.  This war will continue to destroy budgets, cause uncertainty in energy prices, and be a general thorn in our side until a resolution is reached.  I’m not very impressed by the Russian forces, and if the news I heard is to be believed, they are running out of ammunition and their casualty rate is not sustainable. However, losing may not be an option for Putin, and unfortunately, a replacement for him could be worse (i.e., more belligerent). 

2) Congressional Gridlock.  With a slim Republican majority in the House of Representatives, new legislation may not make it through Congress.  If gridlock does occur, it will be a short term (i.e., less than 6 months) disruption as companies adjust their planning assumptions to the reality of desired legislation stalling in Congress.

3) Stagflation/Inflation/Recovery.  There are plenty of predictions for each of these outcomes.  I plan on being prepared for each of these possibilities with plenty of liquid assets to cover expenses for a six-month period (e.g., if I were on a complete retirement income profile, I would make sure I did not have all of my retirement in the market for needs less than 6 months out).  Additionally, with the market being at a low point, I will take advantage of the dips and buy low. 

As you can read above, I’m not positive on the US economy at the current moment, nor am I confident 2023 will be a banner year.  My models and research do point to a stronger performance funds listed above at 100%, for at least the short term.  I am slightly positive on the International Markets as they have had time to adjust to some of the more recent shocks (i.e., China unrest and energy spikes) and may be more settled than what we are seeing in the Large Cap funds and most of the Small Cap Funds.  For my TSP Subscribers, each of these funds are slightly different than the standard TSP funds and the managers of each of these funds have a track record that I must consider, especially as it pertains to FDLVX.
Thank you to all of my subscribers, I wish you a Happy New Year, and Keep Calm and Keep Investing!