Broker Check

3rd Quarter 2023 Review

October 02, 2023


3rd Quarter 2023 Review                                                                                                     October 3, 2023

Dear Awesome Clients and Friends,

Greetings and Happy Fall to All!

It’s official: According to a recent survey, people in the U.S. overwhelmingly favor Fall as their favorite season, thanks to autumn colors, Halloween, sweater weather, Thanksgiving, and yes, maybe even a winning Browns season!

It was a Weak Quarter - What Happened to the Great Start of 2023?

Good riddance to what has been a rough patch for stocks in the third quarter. In fact, all three major stock indexes closed dismal quarters on Friday, erasing much of the gains from the first half as investors soured on technology stocks and got over the “exuberance” of the Artificial Intelligence hype.

The S&P 500 (down 3.7% from July 1 through Friday’s close), Dow Jones Industrial Average (down 2.7%) and tech-heavy Nasdaq (down 4.1%) each suffered their worst quarterly losses since last year’s third quarter. Despite the slump, all three major indexes remain up this year. Losses were strongly concentrated in September due to mounting evidence that interest rates will remain higher for longer.

It was only three short months ago that the first half of 2023 ended in one of the best starts to a year ever for stocks. This is the type of weakness that is perfectly normal and likely necessary for stocks to catch their breath before a new trend upward.


The Economy, Rate Hikes, and The Election

Despite a recent pullback in inflation, the Federal Reserve raised its key interest rate by a quarter point in July and signaled another hike is at least on the table, if not likely, in coming months amid a solid economy. The move increased the federal funds rate to a range of 5.25% to 5.5%, the highest level in 22 years. The good news- the Fed doesn’t meet again until November, so there will be a vacuum of news on the monetary policy front for some time and no further rate hikes for now.

The economy, interest rates, and inflation will invariably be on the minds of voters as the 2024 Presidential Election heats up. Much can change in the coming months, but typically the pre-election years are positive ones for stocks with the fourth quarter being strong.

The fourth quarter has been the friendliest period for stocks historically – BlackRock research found the S&P has risen an average of 4% during Q4 since 1957, by far the strongest return of any quarter.



Asset Allocation Updates

As interest rates have risen over 500% (yes that’s correct) since the Federal Reserve began their gallant effort to slow inflation- we have enjoyed great short-term yields on cash and money markets. The Schwab Money Market Fund (SWVXX) is still currently yielding 5.23%. For now, we are happy to park short-term funds and cash in this money market fund. Over the last year we have allocated more to cash and money market funds. We have also used short and intermediate bonds for the conservative part of portfolios. Remember, we must focus on after-tax and after-inflation rates of return, for the long term, we need to have more growth to keep up with purchasing power and inflation.

We will remain cautious as we approach the last quarter of the year but expect to make some adjustments to cash levels in proportion to bonds, stocks, and other asset classes. It is important to remember that we can’t predict the markets- but having a plan and reasonable goals, no matter what stage in your financial life, will help you remain confident and on track. Trust your financial plan.

If you attended our Annual Forecast event, you might remember my market prediction for 2023. I can still hear the collective “gasp” from the audience of more than 125 people when I said “15%!” Certainly, I have been wrong in the past, but this year WE ARE STILL LOOKING GOOD!

It is my singular focus to provide the advice, performance, and personalized service you can depend on to build financial security.  It is my honor and privilege to serve you and your family, and we look forward to seeing you soon!



James T. Elios, MBA, CHFC®, CLU®, AIF®,

President and CEO




The information presented in this newsletter is the opinion of Elios Financial Group, Inc. and does not reflect the view of any other person or entity.  The information provided is believed to be from reliable sources, but no liability is accepted for any inaccuracies.  This is for information purposes and should not be construed as an investment recommendation.  Past performance is no guarantee of future performance.  Elios Financial Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission