Last year was a tough one for investors, with stocks and bonds both experiencing bear markets. Now, with markets off to a promising start in 2023, many investors are focused on figuring out which stocks could be winners, when to buy, and even whether the January rally is a head fake.

But before making investment decisions, I recommend that investors step back, take a breath, and think longer-term. First of all, the exact timing of when you get into the market is far less important than staying invested for the long term. You might have your doubts about whether the market will be higher three months from now, but you're likely a lot more confident that it will be higher in five years.

The important thing is that you have money in the market so that you benefit from long-term market appreciation. If you're sitting in cash for prolonged periods, you're a spectator, not an investor. You might be on the sidelines because you're just too nervous to get in to the market after 2022's volatility. Moving money into the market gradually helps many investors overcome this kind of paralysis: If stocks go way up in the next month, you'll have made money. If they go down, you'll have limited your losses.

Of all my clients, those that have gotten the best investment results over the years have been the most patient ones. Rather than reacting to every one of the market's short-term ups and downs, they basically trust that over time, good companies are going to grow and make money, and that they as investors will ultimately benefit.

Now for what to invest in. The first step in figuring that out is to, again, pull back. This time you need to re-identify your goals and objectives, whether that's for the next one year or the next five, 10 or 20 years. A one-year goal might be buying a house or a car; a 20-year goal might be a comfortable retirement.

Once you know your goals, an experienced investment advisor can help you develop a mix of investments that gives you the best chance to achieve them with the least amount of risk. To populate your portfolio, your advisor can then recommend specific stocks, bonds and other investments that have the most favorable prices, business outlooks and other qualities.

If you've mostly stayed in the market throughout the past year-plus or longer, this may be good time to make sure your investments still match your tolerance for risk, your goals and your time horizon. It's likely that some of these factors have changed at least somewhat since the start of the Covid era.

Finally, to ensure that you end up with the best investment portfolio, it's advisable to work with a veteran investment advisor, one who has experience navigating through prolonged bear and bull markets. Younger advisors, no matter how credentialed and intelligent, don't have the irreplaceable perspective that comes with having spent time in the trenches. If you'd like to create a customized investment portfolio, or review your current one, please don't hesitate to get in touch.

This past year has been one to forget—a bear market for stocks, the worst year ever for bonds, and raging inflation and rising interest rates to top it off. Will 2023 be better? While no one can predict the future, I think it's likely that things will improve at least a little bit. Here are my five predictions for 2023.

1. Interest rates will level out. The Fed moved its benchmark fed funds rate, which impacts rates on mortgages, business loans and more, from next to nothing to more than 4%. And it did so in a hurry, squeezing two years' worth of rate increases into one year. The reason for the Fed's urgency was four-decade-high inflation, as the Consumer Price Index peaked at an annualized 9.1% in June. There are signs that the Fed's strong medicine is working-- by November, inflation was running at 7.1%. After several consecutive rate hikes of .75%, the central bank's final rate increase of 2022 was half a percentage point. It's likely the hikes aren't over, though. The Fed may raise them as much as another percentage point total in the first half of the year. Then I believe it will stop—or, if higher interest rates slow the economy too much, could even begin lowering rates.

2. Inflation will keep falling. The rate of price increases could dip beneath 4% in 2023. That's still far above the Fed's stated target of 2%, but the process of taming inflation has always been as slow as turning an oil tanker out at sea. I don't have any doubt that the central bank will achieve its inflation goal eventually; its rate increases have been too aggressive for that not to happen. Another factor that will help push inflation down: supply chains that are steadily recovering from their Covid-era slowdowns. Recovering supply chains are one reason lumber prices, for example, have fallen far from their record highs of 2020 and 2021.

3. Home prices will drop. Low-interest mortgage loans and strained supply sent the price of homes nationwide up an astonishing 41% between the second quarter of 2020 and the third quarter of 2022. Higher interest rates figure to weigh on demand, helping to lower prices. If large-scale layoffs, like those we've seenAmazon, Meta and Twitter, continue into 2023, that could help drive demand down too. But the price decreases might not be steep enough to bring significant relief to homebuyers. Housing construction has lagged demand for a decade, and millennials are in their prime homebuying years.

4. Investors will flock to bonds. Demand for fixed income should increase in 2023 as investors realize that rising interest rates have resulted in the most attractive bond yields in years. Bonds have yielded next to nothing in recent years, leading investors to rely more and more on stocks in their portfolios. The Fed's war on inflation has changed things though. The benchmark 10-year Treasury bond's yield shot from just 1.5% at the end of 2021 to 3.75% at the end of 2022. Investors will also be lured back to bonds by the potential for price appreciation. Sooner or later, the Fed will begin to lower interest rates, and when that happens, lower yielding bonds will come into circulation. That will make higher-yield bonds more attractive by comparison and prompt their prices to rise on the secondary market.

5. A bull market will begin. I think the stock market will turn into a bull market sometime in 2023. The S&P 500 stock index partially recovered from its low point, when it was down 25% in anticipation of a recession, and spent November and December trading in a range between about 3,070 and 4,000. Once the market feels comfortable that inflation and interest rates are heading in the right direction, buying will increase and the S&P will rise in a sustainable way. Stocks might not finish the year in positive territory, but I believe they'll end the year with good momentum heading into 2024. One reason I'm optimistic about stocks is that they've already priced in a recession. If one occurs, it won't catch the market by surprise. If a recession doesn't occur, the lower prices should lend momentum to the eventual market

Past performance is no guarantee of future results, markets can go up and down and not all investments are right for you and your individual circumstances. Please schedule an individual meeting to discuss your risk tolerances, time horizon, and what strategy might work best for you going forward.

Are stocks finally bouncing back? The S&P 500 index is up about 2.4% in November, and investors are asking whether that signals the end of the bear market. My opinion, as an investment advisor for nearly two decades, is this: It doesn't matter.

For long-term investors—the people who are saving and investing for college or retirement or a second home—the market's ups and downs are pretty much irrelevant. Sure, they matter for aggressive stock traders, who are willing to risk huge losses on risky bets about the market's short-term direction. For true investors though, the only thing that truly matters is owning good companies over long periods of time.

And this happens to be a very good time to make sure that the holdings in your portfolio are optimized to get you where you'd like to go. Investors should really take stock of what they own every year, but because of the way the market soared between the Spring of 2020 and the end of 2021, many have neglected to do that. Keeping your investments on autopilot, after all, seemed to be a winning formula.

That approach won't work going forward. The economy is slowing down and low interest rates—a rising tide that lifted all boats as far as stocks are concerned—are a thing of the past. Investing success for the foreseeable future will hinge on the ability to identify strong, well-run companies with durable sources of revenue. The stocks in your portfolio may have delivered great results in the past few years, but it's time to make sure they're still appropriate and that you're not taking on too much risk.

While assessing individual holdings, it may also make sense to shift the balance of stocks and bonds in your portfolio. Bonds have done poorly for more than two years relative to stocks, a fact that has prompted investors to load up on stocks and let their bond allocation dwindle. But given stocks' long run of gains and current volatility, now is a good time to reassess your asset allocation.

The end of the year a traditional time to not only rebalance your portfolio but also to harvest losses. Tax-loss harvesting essentially lets you use banked losses to offset capital gains, lowering your tax bill now or in the future. There were relatively few losses to harvest in 2020 and 2021, but 2022 has provided plenty. Using them can help you keep more of what you earn from investing and from other sources.

The market's poor performance in 2022 has hurt many companies, but it's turned some stocks into bargains. For example, shares of specific high-quality companies that pay strong dividends are now available at attractive prices.

By selling some investments and buying others as appropriate for your goals and situation, you can create an investment portfolio that's in good shape for whatever direction the market takes. When you hear speculation about whether "the bottom is in," and whether it's time to load up on stocks, your best move is to tune it out. Rather than worrying about day-to-day market swings, or trying to predict what the Federal Reserve is going to do with interest rates, ask yourself whether the market is likely to be higher in five to 10 years. If history is any guide, it almost certainly will be. You should invest accordingly.

An experienced financial advisor can help you assemble the best investment portfolio for you, and provide information about strategies for minimizing your taxes so that you keep more of what you earn. Please don't hesitate to reach out to us if you'd like more information.

The 13-year period through early 2022 was a very lucrative one for investors, with stocks, as measured by the S&P 500 index, returning more than 400% over that time. But since the market's high on Jan. 3, investing has been anything but a fun ride.

Stocks are down about 20% this year, despite rallying over the past few days. And bonds, usually a safe haven when stocks are struggling, are down 17% year to date. And there's still a lot of uncertainty ahead as the Fed continues raising interest rates to fight four-decade-high inflation. So what should investors do?

The first step is to zoom out and look for perspective. Volatility and even bear markets are the price of getting access to the markets' long-term returns. That 13-year run-up in the S&P included many significant setbacks, including dips of 28% and 34%. As an investor, you can't enjoy long-term gains without enduring temporary setbacks.

Is the current bear market near an end? It's impossible to say. But one thing to remember is that market timing, however tempting it may be, doesn't work. Study after study has proven that attempting to beat the market by leaving it and then jumping back in at the right time is a fool's game.

Remember, to get out near the top but also get back in near the bottom, you need to guess right twice. Sure, you might get lucky a time or two, but more often you'll lock in a loss by selling and get back in well after a recovery has started. If there were reliable ways to identify market tops and bottoms, professional investment managers would never have down years. Yet nearly 80% of actively managed mutual funds trail their benchmark indexes.

So what should investors be doing right now? History teaches us that during volatile periods, the best thing to do is almost always to ignore the markets and our portfolios and trust that positive returns lie ahead. Consider the fact that between 1930 and 2021, the S&P 500 ended 30 years in negative territory, but 62 in positive territory. While 2022 may end up being a down year, the market is cyclical, and setbacks have always set the stage for more gains.

If you're tempted to sell or buy investments because of scary headlines or tips you've picked up from the media or family and friends, ask yourself whether you truly know something that countless other investors don't. Then ask whether you're certain enough to bet your money on it.

Fear and greed are always powerful forces when it comes to investing, and they are exacerbated in times of stress. If you're investing money that you won't need for several years, your best move is likely sitting tight and remembering that short-term declines in your portfolio are the price you pay for long-term gains. Please don't hesitate to contact us if you'd like to discuss your investments.

A little more than a month ago, markets were in an upbeat mood. Recent data had shown that inflation was finally beginning to slow, and investors hoped that pressure on the Federal Reserve would ease its interest-rate increases as a result. Two positive inflation readings in a row would make that scenario a lot more likely.

That's not what happened, unfortunately: The Sept. 13 inflation report showed consumer prices up 8.3% from a year earlier, worse than the forecast of 8.1%. Inflation didn't jump by 9.1% or 8.5% as it had in the prior two months, but the result it was disappointing given that gasoline prices had fallen sharply. The persistence of price increases is forcing the Fed to maintain its aggressive inflation-fighting stance. On Sept. 21, it raised the key Fed Funds rate by .75%, while signaling that it will continue to act aggressively to combat inflation. In the fastest rate-increasing cycle since the 1980s, the Fed has now moved the short-term rate it controls from near 0% to between 3% and 3.25% in just seven months.

These developments are a reminder that one good reading, whether it's on inflation or economic growth or any other financial data, does not make a trend. I continue to believe that the worst of inflation will soon be behind us, if it isn't already. The producer price index, which measures how much businesses pay for the things they need, fell .1% in August. Drops in so-called wholesale inflation generally point to an eventual decrease in consumer inflation.

How long will it take for consumer inflation to decline in a meaningful way? It's impossible to say for sure. For now, investors should stay patient, but also be on the lookout for buying opportunities. The market can behave irrationally, especially in times of extreme emotion, and smart investors can take advantage of that fact. As volatility occurs, good businesses wind up being sold off alongside bad ones. Market pullbacks can create the opportunity to own great stocks that were recently prohibitively expensive.

It's also important here to maintain a long-term perspective. Even with the 2008-2009 crash and the 2020 Covid crash, as well as innumerable smaller declines, the value of the S&P 500 has increased by 368% over the past 20 years. In the long run, patience pays off.