What’s going to happen with the market this year?

February 1, 2023   |   GuidePost

Today, we want to unpack a question we get asked a lot this time of year: “What do you think is going to happen with the market this year?”

To explore this question—and the question behind the question—is Chief Investment Officer, Zak Lutz. Take it away, Zak!

Note: This video was originally published in our monthly client e-newsletter, Guidepost.

So, what is going to happen with the market this year?

Believe us—we are right there with you! We want to know what is going to happen as well.

Bob Doll, Chief Investment Officer at Crossmark Global Investments and a veteran of the financial industry, recently shared his ten predictions for 2023. We encourage you to check out the article. He summarized his predictions in the following statement:

“The key economic question for 2023 is whether central banks will be able to bring down inflation to acceptable levels without a recession.”

That, to us, is the economic issue for 2023.

We all know that this last year was a challenging one with the market. The good news, however, is that things have been trending in the right direction recently. To name a few:

• The Fed has been making progress in lowering inflation. December’s CPI reading was the sixth straight month that the annual figure has decreased.
• Corporate earnings reports so far this year have been solid. For example, two big banks—JP Morgan and Bank of America—reported solid earnings. This shows that lenders have been able to take advantage of the additional money they can make from higher interest-rate loans.
• China has backed off its zero COVID policies, which will continue to ease supply chain issues.
• The labor market has remained strong.

In short, we are making progress on inflation. And the recession everyone has been predicting has not materialized.

We’ll say it again…prepare not predict

Now, does this mean we’re going to have a soft landing to all of this? Only time will tell.

As we talked about back in February 2021, “Why is the stock market so high??”, no matter the market conditions, we resist the urge to predict and, instead, we prepare.

So instead of asking, “What will happen with the market this year?” I want to propose we ask a different question: “Have we prepared for the market this year?”.

In our experience, this is a much more helpful question.

If you are a LifeGuide client and have done a LifePlan with your advisory team, you’re already prepared! Your advisors have already accounted for disruptions in the market and set up your bucketed investment strategy to help see you through the inevitable ups and downs.

We certainly cannot guarantee an outcome, but we are confident in our preparation for whatever the markets have in store for us this year.

Flipping the script

I want to circle back to the question: “What’s going to happen in the market this year?” Most often, the question is not asked with much optimism but rather with an uneasiness, a twinge fear of the future, and a fear of the unknown—an unspoken need for reassurance that everything will be okay.

The “feelings” we get when we think about what is going to happen in the market (which, by the way, translate to how we feel about the uncertainty of our financial future) can be a huge gift.

These feelings can be a useful litmus test to become aware of WHERE we are currently placing our trust and our faith.

It can reveal to us, as pastor Andy Stanley says, whether our “…faith has migrated from the Provider to the provision.”

If it has, we have an opportunity to shift it back.

Whatever is ahead for us this year—whatever ups, downs, twists, turns, and unknowns—let’s use it as an opportunity to trust the Provider instead of the provision.

Until next time,

  Zak Lutz, CFP^®, RLP^®, CKA^®
  LifeGuide Chief Investment Officer