WC: Q4 Newsletter: Reflections on 2023 - Matt Corthell

Markets – Some Statistics that are Difficult to Believe 

• 2022 markets fell on fears of a recession that was supposed to hit in 2023. 
• In early 2023 we had a banking crisis that, adjusted for inflation, was slightly larger than the crisis in 2008 and the market went up! 
• 98.6% of the companies in the S&P 500 averaged a negative return through October 31^st. Despite that we were up double digits for the same period thanks to the Magnificent 7 stocks. 

These stats should boggle the mind and yet, they tell a very important story. 

1. Markets can fall on fears of bad news without it coming to fruition: In 2022, inflation peaked in the middle of the year and has more or less steadily fallen, the unemployment rate has stayed stable, real wage growth has continued. 
2. Markets can rise due to actual bad news, even when its unexpected: The failures of Signature, Silicon Valley, and First Republic Banks were widely unexpected and came on quite suddenly. Despite this, the rally continued. 
3. Good news can be good news and bad news can also be bad news: There are no exact rules in markets. Of course, we have times where the movements of the economy and stock market are in sync, both up and down. 
4. A few winners can help to offset some losers: As companies gain in value the market rewards them with higher exposures and those that don’t generate as much value tend to be penalized and earn smaller positions in portfolios. As a result, the cream tends to rise to the top. 

Why is this important? To be successful in investing one needs to be prepared for, and ideally expect odd behavior from the markets. It doesn’t always have to make sense, but it does tend to work. The S&P 500 is just shy of all-time highs as we end 2023, meaning so far, the only selloff that has not been followed by a new all-time high is the current market we are in. 

Will we get there? I think so. Will it be a straight line? No. We need to be ready to endure selloffs and take time to appreciate rallies. Clients make the most unforced errors by having expectations that the market will rise and when it doesn’t, they sell because they saw objectively bad news. As we have seen of late, it is never that simple with markets. 

We ended the year on a rather high note as inflation fears have reduced, real wages are rising, and predictions of rate cuts have gripped the market. We should not take this as a sign of a major rally to come in 2024, nor is it a mark of pending doom. As mentioned above, we can get either market outcome with either economic backdrop. Therefore, it is best to be prepared and expect a wide array of possibilities in the coming year and every year after. Accepting these wide range of outcomes will help to limit the possibility of an unforced error as you anticipated it. We are here for specific guidance to help you move forward! 

Wooster Corthell Firm Update 

Early on in my tenure at Wooster Corthell, Al introduced to a concept called Kaizen: A Japanese business philosophy focused on continuous improvement. Become 1% better at all things and continue to revisit them and improve again. With Kaizen the job is never done; it’s just further improved.  

Here is the progress we have made as a firm: 

• We launched our website: WoosterCorthell.com (better late than never!) 
• Thanks to our wonderful clients our Google business page is full of glowing reviews. We are truly grateful for all your kind words. The WC staff and I appreciate the ability to see how our hard work results in your satisfaction because that’s why we are here, to better serve our clients! Please feel free to leave a review or take a look at what people are saying here. 
• We Launched our Managed Cash Program to take advantage of the higher interest rate environment. This program is designed for families, businesses and non-profits looking to invest $100,000 or more in short-term government bonds., which currently yields around 4.76% after fees. [1] 
• We held a record number of calls both in absolute numbers and on a per client basis in 2023 with Rick leading the advisors. 
• We held a record number of meetings both in absolute numbers and on a per client basis in 2023. 
• After advisor presentations we are sending feedback surveys and are averaging a Net Promoter Score (NPS) of 93! NPS is a measure used by businesses to find out how likely clients are to recommend our services to others. 
• Katherine, Devon, and Prasad led efforts to create the first version of our client service tracker. A system that tells advisors which clients need what services, something we never had previously. 
• Makayla, Katherine, Jaclyn, Lynn, and I launched our blogs on LinkedIn and went from 9 to nearly 100 followers in our first quarter. We are currently planning to post 5 per week in Q1 of 2024. 
• These blogs helped generate 1,000 unique visitors to our website. 

I am quite proud of our progress in 2023 and am excited to share more with you in 2024! 

Thank you again for entrusting us with your wealth management needs! 

Wishing you a happy and healthy 2024! 

Matt Corthell

[1] Yield is defined as the income that an investor earns on a security. Yield does not take into consideration capital gain or loss. Therefore, yield is not to be construed as performance (total return). Your yield and performance (total return) may be higher or lower than the yield mentioned above due to changes in price, interest rates and other economic factors. The yield is based on the weighted 30-Day SEC Yield as of Jan. 8, 2024, of each underlying investment.