“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”
Any number of things could have derailed the equity markets in the first six months of 2023. Despite a banking crisis, the threat of a U. S. debt default, and more rate increases from the Federal Reserve, the markets climbed a “wall of worry” with the S&P rising by 16.9%. Investors have been encouraged by the fact that the Fed’s rate increases haven’t ended the economic expansion. First quarter GDP increased at a rate of approximately 2% annualized, above the consensus estimate of 1.3%. About the time of the Silicon Valley bank collapse, investors’ attention shifted back to the old leaders, mega-cap technology. Mega-cap tech companies have fortress balance sheets and would likely be less impacted by tightening credit than other areas of the market. More importantly, mega-cap tech companies are expected to benefit from artificial intelligence (AI), which overnight, became all the rage and focus of the markets.
Read our full investment commentary and letter to clients by downloading the Mid Year letter.