Opportunities on the Horizon: Investing Through a Slowing Economy

overview | WEALTH OUTLOOK 2023 | MID-YEAR EDITION | 9 bonds and to longer dated securities, but as we expect rates to decline, we see a reallocation to equities as likely. The risk of being early versus staying on the sidelines When T-bill rates and cash balances are high, it is tempting to do nothing. In the near-term, that may seem safe, but looking out one year, we believe that those who do not own core portfolios may be less well-off. After the double market shocks of the pandemic and an overly reactive Fed, the next decade looks like one where returns may be above average. Those who stay in cash will not see returns when markets are recovering. Market timing hurts portfolio returns. The worst and best days in a market often occur near one another, and you cannot afford to miss the big up days. What investors should focus on is the value of active asset allocation, which is about choosing what to invest in and when. Over the coming months, we strongly urge investors to reduce their exposure to cash as an asset class. Extending duration should be an investor’s first step. While we may be early when buying certain equities or bonds, our goal is to capture the “total return” of an underperforming asset class. This requires foresight and a willingness to act.