Never a dull moment. This would be an apt summary of the first half of 2023.
A memorable six months featured an epic bank failure and ensuing panic, a political showdown over the U.S. debt ceiling resolved at the eleventh hour, ongoing diplomatic tensions with China, and continued interest rate increases by the Federal Reserve. These made for often sensational headlines and endless media commentary, testing the fortitude and discipline of investors.
Perhaps the most important news from the first half is what did not happen. The U.S. economy slowed but did not slip into recession. Meanwhile, inflation continued to decline, with the latest measurement of 4% showing continued improvement from 6% noted in our April commentary. These economic conditions, better than anticipated at the start of the year, buoyed stocks and bonds to solid performance for the first half, rewarding the resolve of patient investors.
Perspective and Preparation
Bartlett was not despondent after 2022, and we are not unduly excited by progress so far in 2023. In good times and bad, we are determined to stay objective and composed, mindful that achieving your goals requires steadiness throughout market cycles. Our management should always be grounded in realism, rather than optimism or pessimism.
Some historically reliable economic indicators are still flashing “yellow” or “red” at this time, auguring some economic weakness in the next year. We also know that monetary policymakers throughout the world are intent on reducing inflation, which may necessitate a “higher for longer” interest rate policy. So, while pleased by recent improvement, we remain laser focused on factors that are key to sustained success: asset allocation, diversification, valuation, and careful cash planning for withdrawal requirements.
Prudence may seem unfashionable when market conditions are buoyant and aggressive investments are celebrated, but it is a vital safeguard. We know that maintaining appropriate protections will allow us to navigate inevitable market setbacks with equanimity, viewing them as periods of opportunity rather than peril.
Bartlett recently celebrated its 125th anniversary. A timeline from 1898 to 2023 takes us from an era when most people worked on farms to a modern economy with American leadership in technology, health care, and consumer products. While there was memorable adversity along the way – two world wars, two major depressions, and two pandemics to cite just a few challenges – the defining feature was progress.
Using the Dow Jones Industrial Average as a proxy, the increase in this stock benchmark from approximately 40 in 1898 to near 34,000 today represents a 6% annual growth rate. With dividends included, the total return was approximately 10% annually. Albert Einstein was right: compounding is the eighth wonder of the world!
Bartlett’s longevity was made possible by a succession of professionals who made a home at the company, blessed along the way by the loyalty and support of great clients. All of us at Bartlett today feel a tremendous sense of humility and gratitude.
We are not resting on our laurels. At a time when many financial companies are downsizing, we have added ten new professionals in the last year. These represent the next generation of leaders who will help us stay at the forefront of wealth management.
Warren Buffett memorably observed that betting against America hasn’t worked since 1776. Betting against Bartlett hasn’t worked since 1898, and we’ll endeavor to keep it that way.
We are always grateful for your loyalty and honored by your confidence. Please help us by recommending Bartlett to family, friends, and associates who could benefit from our services. Also mention us if you meet an enterprising young CFA or CFP® who is looking for a great place to work!
Best wishes for a fulfilling summer.
This material provided by Bartlett Wealth Management (“Bartlett”) is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Nothing in these materials is intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Past performance is not a guarantee of future results. Opinions expressed by Bartlett are based on economic or market conditions at the time this material was written; actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Bartlett, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Any reference to an index is included for illustrative purposes only. Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products.