Dividend Portfolio Update for December 2023

Every year I anchor myself and maintain a sense of humility by writing down my anticipations for the upcoming year and revisiting them as the year concludes. It never ceases to astonish me how inaccurately I gauge market trends through this exercise. It serves as a strong reminder not to be overly self-assured and recognizing our susceptibility to human traits that often lead us to behave like a collective herd. The exercise is to objectively analyze data, forming an independent analysis, and resisting the influence of many others’ opinions.

Reflecting on my expectations from January 2023

Forecast: My expectation for market returns this year is about the mid single digits. However, we started this year coming out swinging as the Nasdaq is up a whopping 10.6% for the month of January. I do expect the Nasdaq to be the best performer this year after a horrible last somewhere in the low double digits.

The S&P 500 closed up 24%. The Nasdaq closed up a whopping 54% by year end.

Forecast: Inflation will likely continue to come down quicker than most expect near 3% by end of year.

Looks like I was on the money with inflation at 3%.

Forecast: Earnings and guidance will likely continue to guide lower for many companies tempering investor optimism.

Many companies guided lower and looking at how so many investors were sidelined with huge amounts of cash, I guess I can say I was somewhat accurate with this forecast.

Forecast: More layoffs are likely to be announced over the entirety of this year.

I underestimated the power of government stimulus and the difficulty of understanding the delay in how fed policy affects the economy. The job market remained resilient with unemployment rates near record lows.

Forecast: Unemployment will trend upwards but not enough for FED’s to reverse course.

Unemployment rates do seem to have bottomed out and showing signs of rising. FED’s have not reversed course in 2023 but is now signaling they are open to raising rates next year.

Forecast: Rate increases will come to a stop for the year after another quarter or two raises.

FED’s raised three more times in March, May, and July by 0.25% and stopped.

Forecast: Home prices could come down 15-25% over the course of next 2 years.

Average sales prices are down about 7%. I still believe home prices will come down next year as rates remain elevated.

These forecasts played an important role in shaping my decisions for the year. My tendency to set conservative expectations and strive to surpass my financial goals serves as a grounding mechanism and a constant reminder of the importance of humility.

As this year unfolds positively for investors, its time to close out the month and conclude this remarkable year!