top of page

The Market Ahead

Thank goodness the third quarter of 2023 is over. September was just a washout. Most asset classes and most country stock markets were down for the quarter, even though July was a solid month to the upside. Having said this, the US stock market (S&P 500) is still up about 13%, and the Nasdaq 100 is up about 35% for the year.

Oil and commodities rallied during the quarter, and Australian residential property was up 1.78%. Bitcoin and fixed income continue to get crushed.

Although the last two months haven't been fun for investors, major stock markets continue their uptrend and have successfully tested and bounced off their 2022 lows - the bull market remains intact (for now). The good news is that bull markets typically last much longer than bear markets. Since 1928, bull markets have averaged a gain of 114% over 1,011 calendar days. For this bull to match the long-term average, the S&P 500 would need to gain another 70%+ between now and July 2025.

We have just published our 3Q 2023 Financial Market's Handbook, which you can download by click here, or on the image below. The deck covers market valuations, trends, economics, and much more.

There are many cross-currents pulling investors in all sorts of directions right now. Here's are what I think to be the key pros and cons for investors and markets:


  1. We are in a bull market - like it or not.

  2. Investors are still very bearish.

  3. Q4 is typically the best time of year for stocks.

  4. Years that start like they did in 2023, have historically finished off well. In fact, the last 10 prior years (like 2023), the stock market was higher 100% of the time with an average gain of 6.1%.

  5. Inflation has peaked.

  6. Job market still strong.

  7. Consumers and corporations are healthy.

  8. Manufacturing slowdown looks to have bottomed out.

  9. Lots of infrastructure spending.

  10. Earnings estimates are now much stronger.


  1. Market breadth continues to remain quite narrow.

  2. Yield curve still telling us a recession is on it's way.

  3. Monetary policy is still restrictive.

  4. Leading indicators are weakening.

  5. Housing affordability is low.

  6. Lending is tight.

  7. Valuations aren't cheap.

  8. TIAA (There Is An Alternative) - cash and bonds look attractive.

  9. Although inflation has peaked, it seems to be remaining steady MoM (month on month).

  10. Stock market is making lower highs.

I don't know how all of this will play out, no one does. If I took a guess, we continue to see markets rise, and beneath the surface, fundamentals deteriorate. We have a recession in the back half of 2024, clean the system out, shut everybody up, and we're back on again in 2025. But don't listen to me, these are just wild guesses, and the market could prove me wrong at any time. Another wild guess is that the market continues to tick along higher and higher. Meanwhile, investors sit on the sidelines rooting for the recession that already hit in 2022. You know, the one that didn't look like the one you were expecting - we did have two consecutive quarters of negative GDP in 1Q 2022 and 2Q 2022.

The one thing you should listen to though, is this: you need to have a game plan. A game plan that incorporates these potential outcomes, not just the ones you think should play out - the market doesn't care what you think. Those who react and are surprised to such market outcomes are ill-prepared. Benjamin Franklin once said, "By failing to plan, you are preparing to fail". He cannot be more right.


Commenting has been turned off.
bottom of page