Assessing The Bond Market and Its Performance This Year
January 18, 2023
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this week. My name is Darrin Cohen, and I am the CEO of Wealth E&P.
We've been off to a good start in the stock market year-to-date for 2023. The S&P 500 is up about 3%, but I would say it's a very tenuous market with a lot of uncertainty about volatility and risks. We believe that there's a lot of negative sentiment right now that is going to drive the market down before we see a real recovery.
I want to talk about the bond market today, which is something that I haven't wanted to talk about for years. For about a decade, I've been saying to stay away from bonds; we've been in a declining interest rate environment and there really wasn't enough yield to get. However, I want to take a look at it right now and chat about it.
Bonds had the worst performing year in history last year in 2022, down 13%, which is by far the worst we've ever seen. Along with that, we obviously had a stock market that struggled and was down 18%. For the first time really in a long long time, it actually might be a good time to look at adding bonds back into your portfolio.
Last year we had tremendous outflows in bonds, meaning that a lot of people were pulling their money out of bonds. You might think that it is a reason to get out of bonds. However, in the year following significant outflows, bonds are up over 7%. Once again, this might be a time to start talking about and thinking about bonds again. We're talking about it in our investment committee, so feel free to give us a call to pick our brains.
If you have any questions about this topic, your portfolio, the economy, or if you want a risk profile or a retirement projection, please feel free to reach out, visit www.wealthep.com, or give us a call at (678)-739-0175. Otherwise, stay tuned for our Market Minute next week!
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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.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.