Goodbye 2022. Hello 2023! Inflation was up, financial markets were down, a war in Ukraine, natural disasters, mass shootings, political divisiveness at home and abroad, even a baby formula shortage…all contributed to tough times last year. On the positive side, COVID faded, a 3% unemployment rate held, scientific breakthroughs for cancer and Alzheimer’s, and travel vacations revived. Most of us are relieved to open a new chapter with hopes of feeling more secure, living in better health, and seeing our assets grow again.
It was a year of losses across the financial markets in 2022. The DOW fell 9%, the S&P 500 lost 19%, and the tech heavy NASDAQ dropped 33%. Corporate bonds were down 12%, US Aggregate bonds lost 14%, and Hi Yield bonds declined 10%. The worst sectors were Communication Services -39%, Consumer Cyclical -36%, and Technology -28%. The only positive sectors were Utilities +2% and Energy, up a whopping +64%. As the Federal Reserve Board raised interest rates again and again, stocks plummeted, corporate earnings are now falling, and serious layoffs are beginning to appear. The silver lining is that you can currently park cash in short-term CDs or US Treasuries for nearly 5% interest.
Pacific Sun’s AUM (assets under management) fell 15% in 2022, less than the markets but still disappointing. We have kept to our general investment rules of “buy low, sell high”, focusing on American business and real estate, and keeping a long-term perspective. No matter what the media promotes or predicts, no one really knows what’s coming in 2023. (None of the “experts” predicted the 60% rise in the S&P 500 during the pandemic.) Despite the bumpy road, we continued our client retention rate at 99%. We thank you for your patience and loyalty as we navigate through tough times. We moved our Aliso Viejo to Laguna Niguel and added a new office in Los Angeles. Please schedule a review and come visit.
We anticipate more storms in the markets in 2023. We will build shelter for a rainy day with balance and diversification. With prices low, we will continue to buy on the “dips” for long-term growth, knowing that equities will recover and head higher again. Industrials, Materials, Energy, Cybersecurity, Biotechnology, and Healthcare look to be good investment sectors in 2023.
Best wishes for a healthy, happy, peaceful, and profitable year ahead.
Mitch Fisher & Ryan Fisher
[1] CNN Business, January 1, 2023