It has been quite the year. It is a good thing that we don’t believe in forecasts. I’ve written a lot about how often most market forecasts are wrong. I regularly mock the talking heads in the media because they are consistently wrong with their projections. You would think they would stop predicting the future at some point, but that never seems to happen.At the beginning of the year, almost everyone was predicting a recession. It made sense that the highest inflation and fastest interest rate increases in 40 years would devastate our economy. The debate was whether the recession would be mild or severe. In the end, the recession never came. There was too much government money floating around in the economy, holding it up. In the short-term, that wound up helping stocks.During the year, we went through a regional banking crisis that took out Silicon Valley Bank. The war in Ukraine continued, while another fight broke out in the Middle East. These significant issues would take the steam out of the stock market.Through it all, the S&P 500 finished the year up 26.2%. For perspective, that is barely below its January 2022 record.The Dow Industrials gained 16% and hit a record of just over 37,000 with seven new highs to close out 2023. Big Tech and Artificial Intelligence took the Nasdaq up 43%, which was impressive.The most substantial part of the market was the technology stocks known as the Magnificent Seven (Apple, Nvidia, Alphabet, Amazon, Tesla, Microsoft, and Meta). They fueled much of the year’s gains, powering the Nasdaq Composite up 54.9%, its best year since 2020.The S&P 500, with 30% comprised of these seven stocks, posted a 26.2% gain and ended within striking distance of an all-time high. The domination of these large stocks in the key indexes shows how the economy is turning into a market of monopolies.

Portfolios
“Conservative” bonds were all over the place in 2023. The 10-year Treasury yield started the year at 3.88% and rose to nearly 5% in mid-October. At that point, because they move inversely, long-term government bonds were down 13%. Around Oct. 20, rates began to fall, and bonds rallied over the next two months—all of the bonds that had been down ended the year in the plus column.After all the back and forth in interest rates, we were happy that our conservative portfolio, Managed Income, closed the year up 4.2% net of fees.Our Top Flight portfolio put in a strong performance on the growth side. It generated a total return of 29.2% net of all fees versus 26.3% for the S&P 500. From its inception in January 1998, Top Flight has generated a total return of 1527% versus 695% for the S&P 500, net of all fees.More By This Author:Stocks Up Bonds Down
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