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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.

We should all know by now that an expensive stock market does not guarantee it will fall – stocks typically look expensive throughout periods of strong returns. However, a high valuation does reduce the odds an investor will earn high returns going forward. Fortunately, because of the nature of how we manage portfolios; today's higher bond yields and an expanding investment universe provide us with abundant investment opportunities outside of stocks. We believe now is an excellent time to hold some eggs in other baskets…

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.