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Investor Outlook for the 3rd Quarter of 2023 and Beyond

There is much talk in financial circles about the possibility that the U.S. will experience a recession in 2023. According to the New York Fed, the U.S. has a 70% chance of falling into a recession by May of 2024. Obviously, no one can completely tell for sure if this will happen, and if so, at what level of severity. (Source: markets.businessinsider.com, 6/17/23)

When asked about the possibility of a recession during the monetary policy session in Portugal in June, Chair Powell stated that, "There's a significant possibility that there will be a downturn," Powell said, adding that it's not, "the most likely case, but it's certainly possible." (Source: cnbc.com, 6/28/23)


As a reminder, like downturns, recessions are not new concepts. The S&P 500 has weathered 17 recessions in the last century and never failed to recoup its losses. Please keep in mind that the S&P 500 historically starts to rebound before the end of a recession, which makes market timing a poor investment strategy.


Right now, cash levels are at an all-time high. As of May, money market assets are the highest they have been in decades. This makes guessing about market moves even more difficult. While there is a high amount of cash on the sidelines currently, that could change and affect equity pricing. With this, investors should not try to out-guess what the markets will do.


Proactively plan to ensure you have your financial plan set up to best weather anything the economy may throw at you!
Weather the Storm

Instead of trying to predict whether a recession may happen, we suggest you proactively plan to ensure you have your financial plan set up to best weather anything the economy may throw at you. The past few years have taught investors that it’s better practice to expect the unexpected.


Should the U.S. experience a recession, it is wise that you remain financially liquid. This means that you should make sure you can meet your financial obligations. You should also anticipate any large cash commitments you foresee, such as funding a wedding, purchasing a home, or buying a recreational vehicle.


Heading into the third quarter, we will continue to keep an eye on inflations rates, economic growth data, and monetary policy moves. Since the conclusion of the debt crisis, we are hopeful that this upcoming quarter brings less surprises and cliffhangers. Our goal as your financial professional is to not try to predict the future but provide you with a solid financial plan that is designed to best weather any market environment. While past performance is not a guarantee of current or future results, history shows us that returns from equities after a recession have been fruitful.


We stand by our belief that investing in equities is a long-term commitment. Investors can expect to continue to face a challenging market environment and the need to look at long-term stability and quality, practicing patience, and proceeding with caution are key to your financial success.


We know that loss aversion can be a powerful motivator for investors to back out of equities during uncertain times. Please remember, historically, investors with a long-term plan that stayed the course and remained diversified and invested were rewarded. We believe this still holds true for today’s investors. Savvy investors have a long-term mindset and have well-devised and diversified financial plans.


The coming months could be filled with uncertainty and more market volatility. A few tips to help you through uncertain times are:


  • Keep your head down and do not make decisions based on what you hear from the media.

  • It is always sound judgement to live within your means and to not incur any more debt than necessary.

  • During uncertain economic times and higher interest rate environment, it is even more wise to pay down your debt and try not to incur any more.

  • If possible, continue to add to your savings.

  • If you need to, review your financial plan with us.


Our goal as the steward of your wealth is to help you through uncertain times like these. We always attempt to help you create a well-crafted plan customized for your unique situation and goals that takes into consideration how you will react to the equity markets ups and downs, including your time horizon, tax implications, liquidity needs, risk tolerance, and your overall personal objectives. Please remember we are easily accessible to our clients! Feel free to contact us with any concerns or questions you may have.


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