Broker Check

Curo Client Letter: 2023 Mid-Year Review

July 31, 2023

Breaking news: The end of the world has been inexplicably postponed.  Again.

The real key to making money in stocks is not to get scared out of them” – Peter Lynch

We hope this finds you and your family enjoying the summer so far!

Despite the many reasons why the S&P 500 shouldn’t have performed well in the first half of 2023, it has proven to be a gravity-defying upward market.  If you happened to read any financial news in January through June, you probably saw the proclamation of the imminent: (a) economic recession, (b) intractable inflation, (c) a collapse in corporate earnings, (d) a U.S. default over the debt limit, (e) a banking crisis on the scale of 2008-09, (f) a crash to new lows in the stock market, or (g) all of the above.  It’s official: the end of economic life on the planet has again been inexplicably postponed.

If you happened to get frightened, or even considered selling out of your high-quality investments at any point in the last six months, you are human and you are not alone.  The news can be scary.  It is designed to be scary.  We had our share of conversations with nervous clients wondering if they should make dramatic changes to their portfolios (read: go to cash until “things improve”), but this is why we warn about reading and listening to the apocalyptic news too much (or at all).  It can cause long-term investors to make short-term, impulsive, and detrimental emotional decisions.  Thankfully, you - our clients - stayed invested.  Our hope is that this experience teaches an important lesson, yet again: in our observation, those investors who look at the crisis du jour and say, “This too shall pass” have historically tended to be more right, more often than those who say, “This time is different” and head for the exits.

Now that we have that important lesson out of the way, let’s check back in on the current status of the allegedly existential crisis that haunted the economy and the markets over the last year and a half.

Recession:  Might still be coming, because monetary tightening (increasing interest rates) often works on a long lag and many recession indicators are flashing red.  But so far, the economy seems more resilient than the consensus was giving it credit for just a short while ago.

The Federal Reserve (Fed): Says there are more interest rate increases to come, but it’s getting a lot closer to the end.

Inflation: Will still take some time before hitting the Fed’s 2% target but has moderated considerably.

Wage Growth: After two years of real (inflation-adjusted) wage growth being negative, wages are now growing faster than the rate of inflation.

Earnings: Down a bit in the first half of 2023, but less than consensus expected (are you spotting a trend?).  A 2024 earnings recovery of substance is now being cautiously forecast.

U.S. Default: Didn’t happen.

Dollar: About where it was a year ago; no significant weakness just yet.

Banking: Seems to have stabilized; no contagion so far, anyway.


Consumer Sentiment: Still low by historical measures but improved compared to 12 months ago.

In summary, everything that happened (and didn’t happen) in the first half of 2023 turned out not to matter much.  What mattered was that together we chose not to react.  We are long-term, goal-focused, planning-driven owners of broadly diversified portfolios and we continued to act on our plan, as opposed to reacting regularly to current events and conditions.  We are proud of the way our clients handled the last six months.  It is an honor to serve you and we thank you for the opportunity to do so.

As always, if you have any questions, feel free to reach out.

Best wishes,

Anne, Atricia, and Anne-Marie aka “The A-Team”