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Volume 11, Edition 38 | December 19 – December 23, 2022

An Investor Holiday Wish List

Doug Walters, CFA
As we look forward to the new year, we put together our investor holiday wish list. Read on to see what we are hoping for to ensure 2023 delivers for investors.

Contributed by Doug Walters, Max Berkovich, David Lemire, Eh Ka Paw

Each year, as we approach the year’s end, we like to put together our investor holiday wish list. After a difficult 2022 on many fronts, we all deserve gifts from Mr. Market! On our list are a collection of goodies that would make 2023 a year to remember for all the right reasons.

New Year’s Sales

We have been contending with elevated price increases since the start of the pandemic. So, tops on our list are lower consumer prices. Perhaps 2023 will finally show us some material inflationary relief.

Stranger Things Finale

The market cheers poor economic data these days, hoping it is a prelude to inflation relief. Next year we hope once again to be able to celebrate job and wage growth. Can we finally exit the upside-down world where bad is good?

World Peace

Our hearts go out to all those living under the shadow of war around the globe. For investors, the war in Ukraine and the resulting energy crunch have been yet another inflationary challenge. Here’s hoping for a resolution.

Doves

Not the bird, chocolate, or soap. What we want is a more dovish Fed. That will only happen if Chairman Powell and his cohort gain some confidence that inflation is well under control.

Stocks and Bonds

In 2022, stocks and bonds fell in an unusual, highly-correlated fashion. We don’t mind the correlation in 2023 as long as values are headed back up!

Higher Tax Bills

That’s right! In 2022 we were able to reduce tax bills by harvesting investment losses. While this added value, we would much rather be realizing capital gains taxes because everything is going up!

We can wish all we want, but there is no telling what 2023 has in store for investors. Rather than crossing our fingers and hoping we get all that we ask for, we are preparing for the unknown with diversification, evidence-based investing, tactical positioning, and opportunistic rebalancing. We will sleep well over the holidays, knowing our portfolios are ready for whatever may come.

$250M Bail

Cypto fallen angel Sam Bankman-Fried’s bail was set at $250M. We put out a cautionary cryptocurrency guide last year, which is still relevant if you want to better understand the industry behind these headlines. Link: Cryptocurrency 101

Headline of the Week

You’re GROUNDED!! Now go to your room…

The drama surrounding FTX and SBF took a comically surreal twist this week. Sam Bankman-Fried (SBF), the former founder and CEO of collapsed crypto firm FTX, was brought to New York to face criminal charges. Maybe we have a warped sense of humor, but a condition of his bail is to remain confined to mommy and daddy’s house in California? Here’s to hoping he at least has to do some chores without any allowance.

  • On a more serious note, we hope this arrangement leads to faster answers to what happened and higher asset recoveries for those impacted. For the rest of us, the lessons of this speculative bubble remain clear, and the learning continues.

The Week Ahead

A holiday-shortened week leaves very few things to keep an eye on.

Japan

Bank of Japan (BOJ) shocked the markets this past week by adjusting its yield curve controls.

  • BOJ must have felt the pressure to tighten as inflation, while more benign than in other developed nations, was starting to make the bank uncomfortable.
  • The Central Bank Governor Kuroda has a speaking engagement, and a summary of the bank’s economic opinions is out on Thursday.
  • Also, there will be an industrial production report, employment report, and retail sales out.

Second Tier

Domestic economic data is sparse and mostly housing related.

  • Mortgage applications, pending home sales, and the Case-Shiller home price index aren’t exactly market-moving reports. However, any spark can light a fire in a short, low-liquidity week.

Holidayz

Happy last few days of Hannukah, Merry Christmas, and a happy, healthy, and prosperous New Year!

  • The market is closed on Monday and the following Monday as well.

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