January 4, 2023

2022 was a difficult year for investors. Both the stock and bond markets have entered bear market territory and many investors are looking for some relief as we start 2023. As stock market predictions come in for 2023, we caution investors about putting much faith in any of these predictions.

Can you imagine if someone had made the following prediction: “We will see 2 bear markets over the next three years, and the S&P 500 will return 7.6% annually and almost 25% overall during that time”? Any analyst making such an outlandish prediction would have been ridiculed by commentators in the media.

But that is what has happened since January 1, 2020.

No one predicted that outcome as we started 2020 and we only know this happened due to hindsight.

As commentators, analysts, and financial advisors continue to make their predictions for 2023 in the media outlets, investors need to remember that these market predictions are nothing more than guesses or hunches.

As we have seen over the past 3 years, accurately predicting the future is much more difficult than anybody could have guessed. But, when we use the gift of hindsight, we can see the S&P 500’s historical average is about 10% through years of double-digit gains and double-digit losses. And hindsight has also shown bear markets are always followed by bull markets.

Gregory, Gabriella, Brian, Samer, and Chris

Prato Capital Management Where Integrity Meets Discipline

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