Dougherty Dispatch: 2023 In Review

Markets Perform Nicely
The Santa Claus rally that started early in November continued into December, allowing
investors to see a very nice rebound from the previous year.
Additional data in December gave investors expectation that inflation and interest rates were
stable and would continue to decline. Indeed, experts predict that the Federal Reserve would finally reverse direction in 2024 and begin to reduce interest rates.

By The Numbers

When we show 2023 valuation changes next to valuation changes the previous year, 2022, we
can easily see how asset values fluctuate and how short-term emotion often carries market
prices. Here are some key asset groups:

Some other interesting corporate stock assets price changes:

Additional observations: You can see by the figures above that investors shifted between 2022
and 2023 from not liking tech stocks to loving them. You may also notice that health and
industrial (Honeywell), as well as utility company stocks, lagged behind tech stocks in 2023, but
led them the previous year. Rather than being disappointed with lagging sectors, we view the
smaller price appreciation of these groups last year as potential bargain areas for new purchases.
However, we shall not lose focus that technology companies will continue to lead the economy.
This is no more evidenced than the huge increase in the stock valuation of Nvidia, a computer
chip maker of artificial intelligent components that are in very high demand.

We continually fine-tune and tweak our core group of stocks and other securities that we
recommend for our clients. For instance, during the final quarter of 2023, we removed Disney
from our core group. As a result, if you have had Disney stock in your account, you probably do
not any longer. Quantitative performance scoring and analysis of this company find that it no
longer qualifies to be part of our clients' portfolios.

A final observation about the obvious performance difference between 2022 and 2023:
Managing these fluctuations is where our firm has to earn its keep. Investing can be emotional
and often short-sighted. Our clients pay us to put emotion aside, and instead contribute cool and
studied analytics based on education, experience and information. It would have been easy to
react to Microsoft's 2022 decline by selling off some or all of it after it sank 29%. We saw some
other money managers do this in their clients' accounts. But analysis has continued to indicate
the long-term strength of the company, so we stayed put and were fortunate to enjoy the 57%
jump in 2023.

2024 Predictions? Never!

We suppose that some historical predictors of trends deserve some credence. In the Dougherty
Dispatch back in July that reviewed the first half of 2023, we quoted a historical finding: "The
S&P 500 stock index has risen an average of 5% in the second half of the year when the index
recorded a positive return in the first half."

In the first half, the S&P rose 15%. In line with historical trends, the market indeed rose in the
second half--another 9%.

Another interesting historical trend: In the last 16 presidential election years, the stock market
has risen. This year, 2024, is an election year.

Let's see what happens.
Our office is in the process of preparing full year client summaries for each of you. If you have
any questions after received, give us a call.

Happy New Year!
The Dougherty Investment Advisor Team