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Stocks had a sharp rebound in January while bonds rose more modestly. It's interesting to note that in the past six months (roughly since The Federal Reserve started easing interest rate policy), stocks and bonds have both dropped together in two of those months. Looking back 24 months, we observe that stocks have fallen nine months…and guess what? Bonds also fell every one of those months.

Despite a resoundingly positive tone, markets posted declines across multiple asset classes in December (and into early January). Stocks softened after ripping higher in November. Bonds also fell as reality set in that President Elect Trump's policies are likely to be inflationary and comments from the Federal Reserve poured cold water on those betting on aggressive rate cuts in 2025. Once again, conservative indices suffered similar losses to the more aggressive allocations thanks to bonds and stocks falling largely in line with one-another (which we have been concerned about for years). Our strategies demonstrated the benefits of private asset exposure, low bond duration and generally more diversification.

Leading up to the US election, there was noticeable concern amongst investors. To many it seemed like a lose-lose situation where on the one hand, the validity of the election could be questioned or on the other…former President Donald Trump won. As it turns out, investors had nothing to fear (with the caveat that I'm speaking as an investor and that Trump hasn't even take office yet). 

In 1985 David Swenson took over management of the Yale University Endowment where he pioneered an investment approach that would come to be known as "The Yale Model" and eventually be emulated by pensions, sovereign wealth funds, endowments and the ultra-wealthy.

While the rest of the investment industry is busy making predictions about the year ahead, we decided it's more important to discuss what we learned in 2023…yet another year where few predictions came true.