February 6, 2023
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
January 29 marked the 30-year anniversary of the first ETF (exchange-traded fund) when the SPDR S&P 500 ETF Trust was launched.
At the time, nobody really paid much attention to the investment vehicle, and it only had $6.5 million in assets. Fast-forward three decades and the first ETF happens to be the largest, with over $375 billion in assets now.
As a whole, the ETF sector has grown to $6.5 trillion in assets. While this is still only 1/3 the size of the mutual fund market, the tides have been turning and the gap has continued to narrow as time moves on.
Few would have predicted this event would revolutionize the industry in the way it has. ETFs have helped lower industry fees and made diversified investing more accessible.
Cheers to the next 30 years!
Coming off a rocky 2022, markets kicked off the new year in style. Stocks surged higher in January with many of last years laggards pulling a u-turn. The tech-heavy Nasdaq led the way with a gain of 10.68%, while the S&P 500 and Dow Jones Industrial Average still gained 6.18% and 2.83% respectively. As a whole, smaller companies outpaced larger companies during the month as well.
Helping propel markets was the growing belief that slowing inflation could soon result in a Fed pivot. As expectations for a less aggressive Fed developed, investors began to price in a higher probability of a “soft landing” rather than a prolonged economic contraction. With overall sentiment increasing, investors turned back to some of last years biggest losers (i.e. consumer discretionary and technology), hoping there will be smoother sailing ahead with a potential Fed shift in the near future.
International equities were also up for the month, with developed international stocks jumping 9.03% and emerging markets gaining 8.34%. This continued the strong performance from last year as companies overseas closed out the fourth quarter of 2022 with some relative strength.
As expectations for a Fed pivot increased, interest rates plunged as the 10-year Treasury yield fell from 3.88% to 3.52%. With rates falling, bond prices increased resulting in a 3.08% gain for the US aggregate bond market. Coming off the worst year of losses in bond market history, the gains were a welcomed change of pace for fixed-income investors.
While we’re only a month into 2023 it’s been a strong start for markets, helping alleviate some of the pain from last year. As optimism increases, it’s important to remain grounded while following a long-term investment plan. It can be easy to get caught up in the excitement of recovering markets, chasing gains higher. However, it’s not unreasonable to expect some volatility as markets continue to feel their way through the events of the past couple years. Sticking with a long-term strategy can help ensure you are making sound, rational investment decisions regardless of market conditions.
The retailer Bed Bath & Beyond went on a wild ride in January as meme stock mania struck again.
Early in the month the company announced it was at risk of going bankrupt as it struggled to attract new shoppers and was having trouble covering key expenses. This news sent the stock price down over 47% YTD through January 6.
However, the stock soared approximately 300% over the ensuing days as retail investors scooped up the embattled home-goods icon.
Unfortunately the good times didn’t last as it was announced on January 13 the company was in talks to sell its assets as part of a potential bankruptcy filing (shocker). This news sent the stock plunging back down over 50% from its high.
When all was said and done, the stock closed the month up 12%, with a good story to boot.
If you’ve been watching the news over the past week, you have likely seen a number of stories regarding the banking industry and some recent bank failures.
To hike, or not to hike, that is the Fed’s question. Unfortunately, many investors are believing it will be the former.
Unfortunately for investors, Santa Claus didn’t bring a rally with him to end the year.
Disclosure:
Winnow Wealth, LLC (“Winnow Wealth”) is a Registered Investment Adviser.
The information presented is not investment advice – it is for educational purposes only and is not an offer or solicitation for the sale or purchase of any securities or investment advisory services. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser when making investment decisions.
This content is intended to provide general information about Winnow Wealth. It is not intended to offer or deliver investment advice in any way. Information regarding investment services are provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
Past performance is no guarantee of future returns.
Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable.
Additional Important Disclosures may be found in the Winnow Wealth Form ADV Part 2A. For a copy, please Click Here.
Winnow Wealth, LLC (“Winnow Wealth”) is a Registered Investment Advisor (“RIA”), located in the State of Texas. Winnow Wealth provides investment advisory and related services for clients nationally. Winnow Wealth will maintain all applicable registration and licenses as required by the various states in which Winnow Wealth conducts business, as applicable. Winnow Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion.
