A Look at 2023's Hot Topics
Key Takeaways
The hot topics in 2023 include but are not limited to:
A looming recession (that didn’t come to pass)
Banking Crisis (that was a good example for the merits of diversification)
A new war in the Middle East (which affect markets only in the short-term, typically as long the geopolitical crisis was not during a recession)
2024 will come with its own worries and headlines. It’s important to focus on your investment plan and fight against letting emotions get the better of you for your financial decisions.
With investor education one of our key tenets, GYC has been producing a range of articles — from hot-button investment topics to broad financial planning themes. We hope that these resources help provide you a well-rounded perspective of what is happening around the world, and where it concerns the possible impact to your investments — that being informed can make your decisions to be independent of emotions. By being an informed investor, in control of your emotions, it is likely that you will make better financial decisions.
Here are some of the insights that we shared in 2023 which were related to the top headlines of the years.
Recession
With the vast majority of financial pundits and analysts forecasting a recession in 2023, it was no surprise that the bulk of investment recommendations highlighted reducing equity risk, and instead, to hold more bonds or cash.
In Feb 2023, we wrote that recession forecasts do not always certainly lead to actual recessions, with the stock market moving ahead of economic numbers.
In Apr 2023, we wrote that news of a recession should not be feared, as such announcements (if any) are lagging and stocks typically are positive looking ahead.
We followed up in Aug 2023 with a look at some of the predictions of the year, to see that almost all of the financial institutions backtracking on what they said, with some even offering apologies for being so far off.
See articles: Looming Recession? Don’t Be Scared!, It’s Going to Get Better, and Why Do We Still Listen to Forecasts?
Banking Crisis
Several high-profile banks collapsed beginning in March, when regulators took control of Silicon Valley Bank as a run on the bank unfolded. A few more stressed US regional banks were taken over by regulators culminating in the widely publicised takeover of Credit Suisse by UBS. The mini-banking crisis resulted in increased anxiety as many investors eyed their portfolios for exposure to these banks — with many Asian investors getting burned after Credit Suisse’s AT1 bonds were made worthless by the Swiss regulator.
We wrote about the merits of diversification in March and April, to show how a diversified investment such as our core portfolios were able to weather the banking crisis storm.
See articles: Current Banking Crisis Shows Why You Must Diversify and Concentration Builds & Destroys Wealth).
Middle East War
Israel invaded Palestine in Oct 2023 after suffering a surprise attack by militant group Hamas. The spectre of another conflict (in addition to the ongoing Russian/Ukraine war) and the possibility of other middle-east countries being dragged into it made investors’ pulses race.
We wrote about how geopolitical crises (and even some financial crises) typically affect markets only in the short-term as long as a recession was not on the cards.
See article: War and Its Impact to Markets
With some of these topics now behind us, it is certain that we will face new headlines and worries in 2024. As always, we want to stress the importance of focusing on your investment plan, and the portfolio that we had constructed for you, instead of picking apart your portfolio every time there are concerning headlines.
For a check-up on your investments, or for more insights, come and have a chat with us.
