The critical questions for investors going into 2023 are how much more tightening the Fed will do to control inflation, how effective those efforts will be, and how material the impact of higher rates will be on the economy and, by extension, corporate earnings.

While examining past market cycles is interesting, it does not provide a magic formula for investors trying to determine the market bottom. The old adage is still true that past performance is no guarantee of future results, but we can still learn lessons from past bull and bear markets and apply them to our current investment decision making.

A number of existing issues continue to weigh on markets, including the extraordinary monetary and fiscal stimulus measures taken to boost the economy amidst the COVID pandemic, as well as new issues such as the war in Ukraine. Disruption from the war and sanctions on Russia will exacerbate the supply-side inflationary problems worldwide in the near-term. However, the labor market remains strong, as are consumer balance sheets, and there is still a lot of pent up consumer demand for a range of products and services.

We believe the biggest risk to markets is the prospect of continued or worsening inflation, and understanding the causes and likely actions by the Fed to combat it is critical. However, we do believe the Federal Reserve will manage the interest rate situation prudently and that inflation will remain historically high but manageable.

With a number of factors continuing to grip the stock markets, we see potential for higher equity prices in the near-term but lower overall returns next year, especially compared to the past few abnormally high-return years.

In response to the economic devastation from the COVID-19 pandemic, the avalanche of grants, loans, and government stimulus provided to businesses and individuals, has been unprecedented.

The impact of the COVID-19 pandemic has been widespread, affecting all aspects of the economy and government. However, during the post vaccination period, we believe pent-up demand for virtually everything outside the home will provide a springboard for a dramatic economic recovery in the 2nd half of 2021.

In response to the economic devastation from the COVID-19 pandemic, the avalanche of grants, loans, and government stimulus provided to businesses and individuals, has been unprecedented.