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Q4 2023 Market Commentary

A November to Remember

Key Takeaways

  1. November bond returns were the highest since 1985. (1)
  2. In 2023 the ten largest stocks in the S&P 500 were up on average 62.0%, while the remaining 490 stocks in the index were up on average 8%. (2)
  3. After five strong years of equity performance, investors should consider rebalancing back to a neutral bond allocation given a lower equity risk premium.

By October of 2022, most economists were predicting that the U.S. would experience a recession in 2023. (3)  Instead, despite rising geopolitical turmoil, elevated government spending, and a regional banking crisis, markets ended 2023 near record highs as a resilient U.S. economy and a pivot in Federal Reserve policy provided a windfall to investors. 

November turned out to be the month to remember for both stocks and bonds, but U.S. investors faced the prospects of turmoil and uncertainty heading into the fall of 2023. Excessive government spending caused concern around the U.S. government’s ability to issue debt, and a terrorist attack by Hamas in Israel, as well as the Israeli response, led to fears of a wider conflict in the Middle East. As a result, the interest rate on the benchmark 10-year U.S. Treasury Note rose rapidly and stocks faltered. But the government was able to issue additional debt without any problems, and as a result interest rates fell rapidly back to where they began the year. Fortunately, fears of a wider Middle Eastern conflict also did not materialize and easing geopolitical tensions, paired with strong demand for government debt and cooling inflation, provided a relief rally in the market. Even once left behind areas of the market such as small cap stocks and financials saw significant gains. 

Inflation data continued to cool throughout the fourth quarter and Chairman Jerome Powell announced a pivot in the Federal Reserve’s monetary policy at his December press conference. Powell and the Federal Reserve Board estimated that interest rate cuts are now more likely in 2024, and they attributed this to stabilizing prices and a higher probability of a “soft landing” for the economy. Markets rejoiced and U.S. stocks ended the year up +25.8%, international stocks were +15.9%, and the bond market rallied sharply to finish the year +5.7%.

JFG Outlook

Market performance in 2023 was led by the largest technology companies. The top ten stocks in the S&P 500 were up 62.0% while the remaining 490 companies in the index were up 8.0% (2).  Historically, a divergence this large in performance has not been sustainable and lagging sectors of the market tend to catch up. We saw this trend began to play out in mid-October, as regional bank stocks were up +26.6% in Q4 compared to the S&P 500’s return of 11.7% (2). As we noted in last quarter’s commentary, we continue to believe popular areas of the market such as artificial intelligence will create long-term opportunities. However, valuations of these fast-growing companies remain elevated, and in the near term we see better entry points in more reasonably priced areas of the market including small caps, industrials, and financials.

Stock valuations, as measured by their price to earnings ratios (P/E) are elevated in certain areas relative to their 20-year average:

Source: JP Morgan’s “Guide to the Markets”, December 29th 2023.


Bonds bounced back in 2023, breaking their two-year losing streak. We titled our Q3 2022 market commentary “Bonds are Back” because we felt that bonds could earn above average returns with significantly less risk than the equity market. While certain bond funds did experience above average returns in 2023, we maintain our preference for high quality bonds in 2024. Adding U.S. Treasuries to a diversified portfolio allows investors to take advantage of higher interest rates and protect against the downside of credit risk in corporate bonds. We believe this more balanced approach to bonds in diversified portfolios will set up well for the coming year. 

Lastly, Charlie Munger, the longtime investing partner to Warren Buffett, passed away at the age of 99 in November. Among his many memorable quotes, one of his key investment philosophies was to “forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.” (4) Warren Buffet later acknowledged that Charlie’s investment approach was influential on his own, focusing less on how cheaply companies were priced, and instead looking for businesses with greater competitive advantages. At Juno we believe in holding wonderful companies for long periods of time, even if that means adjusting along the way when market prices become too rich.

Thank you for your continued trust in Juno Financial Group.



  1. BlackRock’s “Student of the Market”
  2. JP Morgan’s Q4 20223 “Guide to the Markets”
  3. FactSet
  5. Charlie Munger, Warren Buffett’s Partner and Berkshire Hathaway Vice Chairman, Dies at 99 - WSJ