1st Quarter Review
The first quarter of 2023 is in the books. It was a very volatile one. It was not for the faint of heart.
And we saw a reversal of the winners and losers from year end.
Energy and commodities (last years big winners) are both negative for the year.
Growth style investing was out of favor last year and is a big winner (so far) this year.
Many things have dramatically changed since December 31st .
Except for one thing.
Volatility!
The market is still very volatile. Fits and starts. Ups and downs.
This market is not for the faint of heart. It takes perseverance and a plan!
Last Friday was somewhat unique as we had the end of the week, the end of a month and the end of the quarter all on the same day.
Below are the market returns for the month of March:
As I mentioned above, we have seen a change in the “style” of investing over the past few months.
As you can see in the chart below, "Large Growth” investing has outperformed all the other styles.
Under “normal” market conditions, small growth would be the big winner.
This tells me that investors are willing to take risks (by switching to “growth”), but they are not fully convinced that the bear market is dead.
And there is a reason why investors are being cautious with risk right now.
Below is a chart of US Treasuries.
US Treasuries are considered some of the safest bonds that money can buy.
Because, let’s face it, if the US Government can’t pay it’s bond holders, then we probably have bigger problems on our hands.
You can see that the 3 month and 6 month treasuries are paying close to 5%!
That’s 5% you can earn (relatively) “risk free” with your money.
So, you are going to think twice before you put your money “at risk” in the stock market.
The perceived opportunity in your stock investment(s) needs to be a lot more than 5% in six months.
Otherwise, why risk it?
Finally, at 9am EST on Monday, April 3rd, we released new advice for all of our clients receiving advice on their 401k, 403b, TSP, etc.
We have made some decent shifts in investment strategy to start taking a little more risk.
However, I still feel there will be a lot of volatility heading into the second quarter.
Inflation is growing, albeit at a slower pace, things are still getting more expensive every month.
Normally, this would mean that “The Fed” will have to keep increasing interest rates to (literally) try to get us to spend less.
If they do this too fast for too long. They will cause a recession. Which would dramatically slow inflation.
Now, I don’t want a recession to happen, but it is inevitable.
The only question will be is how deep the recession will be and how long will it last.
Which we never know until we are done with the recession. (You know, because hindsight is 20/20).
So, in an effort to try and help as many of the 100 million Americans investing in their retirement plans as I can, I am publicly displaying what we are recommending for all of our clients.
Our software has been programmed to match the best available investment options for all of the categories to the exact options in our clients’ plans.
We tell each one of our clients exactly how to manage their plan, using the exact options within in their plan.
Below is what we have programmed the software with and the changes from the 1st quarter.
Feel free to use the information above to map the categories to the best available option within your plan.
Also, feel free to share this information with your friends, family and co-workers.
And if you are not comfortable mapping and choosing your investments, please reach out to your financial advisor.
Let them know that you want confidence in your plans through Plan Confidence.
Stay confident my friends and have an awesome month of April!
-Kevin T Clark, RF
Kevin T Clark, RF™ is the CEO and Co-founder of Plan Confidence Corporation (PCC). Kevin is also an ERISA Nerd and one of only a hundred Dalbar certified Registered Fiduciaries (RF) in the United States. He has been helping hard working Americans invest their money for over 25 years!
PCC is an SEC registered investment firm specializing in providing advice to hard-working Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc).