Second Quarter Investment Commentary 2023

Dennis O'Keefe |

Happy Independence Day!  While the weather nationwide is not very “seasonal,” the economy seems to be moving forward despite rumors to the contrary.

Let’s start at the top - how did the market perform?  For the quarter, the S&P 500 rose by approximately 8% percent.  Most other investment categories rose for the quarter as well although none as well as the S&P. It was head and shoulders the best investment category of the quarter and of the year.

Bond and CD rates continue to rise as well both on the exchanges and at your local banks.  The downside, of course, is higher loan rates.  Mortgage rates are hovering in the 6’s.  Auto loans are 7% or more.  Boat loans (Please don’t take out a boat loan!) are at 9%. 

One would think this is slowing down the real estate and automobile markets.  While we are seeing some slow-down at times, the complete reversal that usually coincides with rate increases like this is not appearing.  (Keep in mind that less than 2 years ago, mortgage rates were in the 2’s.  Normally a 4% rise in rates leads to a crash of the real estate market.) 

The overall economic numbers continue to impress as well.  Employment is up.  Corporate profits have not dissipated as was expected.  Overall economic growth continues despite all expectations to the contrary.

Which brings me to an important issue that you shouldn’t overlook.

One point of continuing frustration in our offices is how data is presented through the media.

On June 29, the US Commerce Department revised First Quarter GDP from 1.3% to 2.0%.  That’s good news, right?


Well, wrong to the press.  They were very quick to point out that Fourth Quarter 2022 GDP was up 2.6%, and Third Quarter 2022 had risen by 3.2%.  

That seems like honest reporting, right?  The first quarter isn’t as nearly as robust as the previous two quarters.

Here’s the rub - from November through March, the popular press was consistently warning of an upcoming recession in 2023.  It was “just around the corner” for the better part of 5 months - including all 3 months of the first quarter.

How do I remember that?  Because I’ve had the “Are we going into a recession” conversation with clients dozens of times over the last six months.

These conversations are necessary so that clients can sleep at night.  I actually welcome them.  If someone is worried, they should know they can pick up the phone.

If you think the prospect of a recession was concerning to our clients, do you think that this sort of reporting had any effect on consumer behavior?  

What about business behavior?

Remember that businesses are run by people.  So if you’re hesitating on buying a new stereo because there might be a recession later this year, what do you think a CEO is thinking about expanding a plant or investing in new equipment or employees?

Is it any wonder that GDP only grew by 2% in the first quarter and not 2.5 or 3?

I’m not a fan of the news media.  And this is the reason. They report massive speculation that changes reader behavior and then point out that the changed behavior is some sort of problem that existed outside of their control.

What can be done?  Well, we aren’t going to corral the media.  That’s actually unconstitutional.  

And it is likely that your average American is going to pay more careful attention to what actually happened 3 or 6, or 12 months ago.  People’s attention spans are short and are shrinking all the time. And to be honest, we collectively seem to occupy more brain cells with the latest celebrity wedding than the economy.

All we can control is ourselves.  

Making good financial decisions means you don’t just blindly follow whatever shiny object the media is dangling in front of you.

It is important to keep a log of what the media is saying and what is going on.  You actually might want to write it down.

This is my bailiwick, so I have near photographic memory of recent economic events and how they are portrayed in the media.  It’s required as part of my job.  But you may want to set up some sort of system to have a chance at making better financial decisions in the future.

Economic Outlook

What do we expect for the remainder of 2023?  Probably more of the same as we’ve seen so far.  There are no huge financial issues on the horizon.

As of the writing of this, the Federal Reserve has paused their interest rate hikes but has threatened to continue them in 2023 and beyond to fight the specter of inflation.  The reality is that inflation is already at or below the expected range based on current interest rates.  Further rate increases could actually lead to a recession.

If you are a long-time reader, you know I’m no fan of modern Fed policy.  They miss the “turns” too often.  And I believe that they are missing a turn here.  Maybe they are holding back to slow any excessive exuberance on Wall Street.  I don’t believe they are that clever.

We may see an interest rate increase in 2023.  I think it is equally likely - possibly more likely - that we will begin to see interest rates decrease.  That will likely lead to a rise in the equity markets.

In either case, for managed clients, we will act accordingly no matter what actions the Fed or the press takes.

Thank you very much to each and every reader.  We consider ourselves very lucky to have an opportunity to advise you.   

If you have any questions or concerns, please don’t hesitate to email us at or call us at (800) 453-3209.  If you don’t already have a copy of my book, The Biggest Financial Mistakes Retirees Make, you can order it on Amazon or click here, and we will get a copy out to you free of charge!

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This blog is the opinion of Successful Money Strategies, Inc. and is provided for informational purposes only and is not intended to provide any investment advice or service.  Statistics and other figures are accurate at the time of original publishing.  Any advice herein should not be acted upon without obtaining specific advice from a licensed professional regarding the reader's own situation or concerns. 

The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Always count your change.