Earlier this week, I discussed what 2022 taught us about risk. Today, I want to talk about what I will be doing to manage risk in 2023, given those lessons.

For investors, 2022 has been a tough year. We had bear markets in both stocks, which is fairly common, and bonds, which is not common at all. They both happened at the same time, so rather than being saved by diversification, portfolios got hit twice. Even portfolios that were designed to weather market storms, such as a typical 60 percent stocks and 40 percent bond allocation, were hit harder than anyone expected. 2022 was an exceptional year and not in a good way.

Since March 2022, the Fed has continued to hike rates in an effort to control red-hot inflation. Equity and fixed income markets, both at home and abroad, struggled as a result, with markets down in the high double-digits year-to-date. But the tide may be changing.

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, helped me put together this month’s Market Risk Update. Thanks for the assist, Sam! Let’s take a closer look.

As we enter the new year, investors are questioning what happens next. It was a turbulent 2022, including a possible recession and a definite bear market in stocks and bonds. Worries remain, but we’ll start the year with real strengths. Employment and job growth are strong, which will keep the consumer economy healthy. Interest rates are likely close to peaking, and markets are fairly priced.

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

It has been a tough couple of days in the markets, and it looks like today will be another. Not only is the market down in pre-market trading, but this is also a quadruple witching day (i.e., when four types of derivatives all expire on the same day). That often leads to volatility and, in the context of the past couple of days, means today could be difficult as well. I see the effects in my portfolio, and you may have seen them in yours as well. Should we be worried? In a word, no.

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam! Let’s take a closer look.

With the regular meeting of the Fed underway, we now all wait with bated breath to find out what the decision will be. Well, in this case, there is not much doubt: it will be an increase of 50 bps. But we can still wonder about the wrapping on the present. To shift metaphors and get a bit ahead of ourselves, will Chair Powell come out and see his shadow, signaling six more rate increases? Or will there be sunny skies ahead?

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

Today, we are going to be bouncing back and forth between several different economic and market data sets I reviewed this morning and using this information to form both specific and general conclusions. Each of these data sets could reasonably be interpreted as either good news or bad, so it's important to see whether we can tell the difference.

The October bounce continued in November, with the S&P 500 up 5.59 percent and the Dow Jones Industrial Average (DJIA) up 6.04 percent, while the Nasdaq trailed with a respectable gain of 4.51 percent. Internationally, the news was even better, with developed markets up 11.26 percent and emerging markets leading the pack with a 14.85 percent gain. It was a good month across the board and surprisingly so for international markets after an extended period of underperformance.

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead.