Client Newsletter Q2 2023
Dear Friends,
Since our last letter there’s been two major improvements: the weather and the market. For those of us in Chicago, we are enjoying a beautiful summer. Though regardless of your location, I think we can all appreciate seeing green over the last quarter.
The expectation for 2023 was the market would continue trending down as it had in 2022. There was a lot of trepidation in April about what might happen to the market and economy following the bank collapses in March. Once the general market realized the banking system could not be taken down by a few mismanaged banks, the indices climbed higher from October lows.
For perspective on what’s giving the indices the biggest jump, the stocks that got beat up the most last year are the ones leading the market higher. The big dogs of the tech sector, such as Google, Meta, Apple, and Nvidia, have rebounded significantly. A part of the reason for the big rebound in tech is due to the selloff last year being an overreaction. Another portion is attributed to the dreams of an AI revolution creating a new gold rush. However, this is all it is, a dream. AI will undoubtably be a useful tool, but the valuations are unrealistic for the bulk of the companies in the sector. For the most part, we have limited exposure to these individual names; however, sectors we favor such as consumer discretionary and industrials have been doing well, up 13.55% and 9.28% respectively in the second quarter.
Overall, the economy is still chugging along. It looks like the U.S. might be able to avoid any contraction for the foreseeable future. Hopefully the only Bears we will be talking about this fall are the ones playing at Soldier Field. The job market continues to be resilient with consistent growth and a low unemployment rate. Inflation is under control with the most recent year-over-year increase in consumer prices coming in at 3.0%, significantly below last year’s numbers. The Fed raised interest rates in July, and there may be one or two additional increases. As a result, there may be some volatility in the short term.
In the next few weeks, as the summer nights become shorter, you will be receiving correspondence about the transition from TD Ameritrade to Charles Schwab as the custodian of your accounts. Don’t worry, you won’t have to do anything. On September 8th, instead of accessing your accounts through the TD website you will use Schwab.com. This will be a seamless transition and we are here to answer any questions you may have.
Enjoy the remainder of your summer.
Warm regards,
Investment Advisory services offered through Moonstone Asset Management, Inc. a registered investment adviser
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
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