Broker Check
A Season to Remember

A Season to Remember

December 06, 2023

Dear Clients & Friends,

Solid gains for both stocks and bonds gave investors a “Season to Remember”.  As financial markets continue to defy the skeptics, I’m reminded of a quote from Warren Buffett’s long-time partner and one of the greatest investors of our time, Charlie Munger, who sadly passed away last week.  “The world is full of foolish gamblers, and they will not do as well as the patient investors.”  We couldn’t agree more at Mercer Partners.  Patient investors have been handsomely rewarded in 2023 and will continue to be handsomely rewarded into the foreseeable future.

The renewed confidence in a soft landing for the U.S. economy has shifted the focus away from rate hikes and toward eventual rate cuts, helping to pull long-term interest rates down and encouraging market participants to pay higher prices for stocks relative to expected earnings.  A good start to holiday shopping season supports the soft-landing narrative.  Online sales since Black Friday are up 5% over the same period last year according to Adobe.  Lower prices at the pump, falling goods prices, higher stock values, and rising wages should help keep the momentum going.

 The other key piece of the soft-landing equation, inflation, is well on its way to the Federal Reserve’s 2% target. Remarkably, the preferred inflation measure, the core personal consumption expenditures (PCE) deflator, rose at just a 2.2% annualized pace over the past three months, down from 5.3% in the year prior.  We’ve said it before – the market will not be able to advance materially higher until inflation is brought under control and it appears that is exactly what is happening.

 Looking ahead, we think the combination of corporate America’s solid fundamental foundation and the support from lower interest rates will more than likely set the stage for additional stock gains in the coming year.  The slowing economy will help ease inflation.  Less inflation will help promote interest-rate stability and earnings are entering their sweet spot following an excellent third quarter earnings season.

 Yes, there are risks.  Some of the impact of higher rates is yet to come.  Consumers have drawn down most of their excess savings. U.S. government debt is getting more expensive.  Wars overseas have heightened geopolitical risk ahead of what will likely be a divisive 2024 U.S. presidential election.

 But as Mr. Munger told us, patience will be rewarded.  No one knows exactly what will happen through the end of the year and into 2024, but history shows that stocks tend to produce above-average gains in December and rise much more often than they fall—even after strong gains the month prior.  This would be a fitting end to what’s truly been a remarkable year.

 As always, thank you for your continued trust and confidence.  Please reach out to our team if you have any questions.

 -Nick


Important Information

Nick Enzweiler, CFP® is a registered representative with, and securities offered through LPL Financial.  Member FINRA/SIPC.  Investment advice offered through Mariner Independent Advisor Network, a registered investment advisor.  Mercer Partners Wealth Management and Mariner Independent Advisor Network are separate entities from LPL Financial.  Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP® in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of December 5, 2023.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Past performance does not guarantee future results.

Asset allocation does not ensure a profit or protect against a loss.

For a list of descriptions of the indexes and economic terms referenced, please visit our website at lplresearch.com/definitions.