At the end of the June 2023 quarter I wrote, "What a difference three months makes?...From cracks and fragile markets to new stock bull markets, property prices bottoming out, and inflation back down the 3% (US YoY)."
At the end of the September 2023 quarter, I wrote "Thank goodness the third quarter of 2023 is over. September was just a washout."
And for the end of the December 2023 quarter, we were close to hitting All Time Highs (ATH). Although at the time of writing this note, the stock market has well and truly made a new all time high, we weren't too far away in December of 2023.
This is the financial markets my friends. They will pull you in, push you out, lie to your face, plead for forgiveness and do it all over again. And you know what you need to do, just ignore, and stick with it. It's hard, I know, it's why I have a job.
Most major asset classes were up during the quarter, except for commodities - Bitcoin up almost 56% during the quarter! Surprisingly, the ASX was in second place, up 14.60% (in USD terms). Most country stock markets were up, and all factor strategies were up on the quarter too.
2023 saw the US stockmarket fall 10% during the year, this was the worst drawdown, yet finished the year up +24%. This is not unusual. It doesn't feel unusual when you're in the midst of it, but you know what to expect, it helps lighten the beating a little.
Here are the key takeouts for me this quarter:
The market continues to surprise and embarrass the experts and the pundits. If you were in cash during the quarter, on the back of a poor Q3, you just got smoked (page 4).
Australian Momentum, Quality, Large, Value, and Growth, were the leading factors (in that order) for the quarter. US and World Value continue to underperform (page 6).
10-year bonds are telling us we can expect about 4.20% p.a. for the next 10 years from bonds. Not a bad place to be (page 14).
S&P 500 company profits continue to rise (page 18). I wrote in November 2023 why I thought the earnings recessions was so 2022. And their profit margins continue to rise (page 19)!
Property investors in Australia are sitting on their hands, and the Owner Occupier is back (page 25)! With Melbourne prices lagging other major cities (page 28).
Bonus takeout:
I still think we're in for a long-term bull market, and we've got a long way to go (page 35)!
We have updated our Financial Market's Handbook for 4Q 2023 and examine the impact the last quarter has had on key financial indicators that relate to financial markets. You can download the report here. You are welcome to share it across your network.
Thank you for reading, and I hope you enjoy it.