Executive Summary: 2023 Aptus Capital Market Outlook

by | Dec 19, 2022 | Blog, Market Updates

The Necessity to Focus on What Matters – One of the most influential things that we’ve all learned is that short-term events rarely matter. In the moment, they will feel like they do, but they simply will not add value over longer periods of time.

This view is why Aptus’ Investment Methodology engages in Simple beats Complex. Investors need to focus on what they can control and prepare for what they cannot. It is not about maximizing opportunity, but more about minimizing the losses.

Focusing on the day-to-day noise can be suboptimal for long-term investors, as many can lose sight of the big picture. This is why advisors know that the first level of defense for a portfolio is the asset allocation, allowing them to prepare for what they cannot control.


Themes For the Future


Given that we are not looking to make specific calls on the market, we’d prefer to focus on what we believe could be three recurring themes next year. In fact, they directly correspond to our Yield + Growth Framework, but in reverse order.

  • Valuation: The Market’s Initial Focus – Assessment of Fed Policy Driving Investor Sentiment
    • Initially, the market will continue to be fixated on the Fed and the likelihood of a pivot or slowdown in rate hiking, continuing to cause volatility in valuations and rates.
  • Growth: The Market’s Latter Focus – Inflation to Growth Frustration
    • Thereafter, the market will start to focus on the possibility of an earnings recession, i.e., inflation to growth frustration.
  • Yield: The Year of the Yield
    • As the market continues to transition into a higher-for-longer interest rate environment, we would put more emphasis on sustainable yield, than earnings growth and valuation expansion.


While we remain cautious on the markets, there is a silver lining for long-term investors. Throughout the year, the market has had a reset not just on valuations, which entered the year at 21.5x forward earnings, but also on interest rates not seen since 2007. The broad landscape appears much healthier than where it was to begin the year.

The best arbitrage opportunity for stocks is time. Lengthening one’s time horizon has been a recipe for loss avoidance. This is a benefit unique to stocks. Remember, market timing is very difficult, as an investor needs to be correct twice – once on the purchase and once on the sale. Not only that, panic selling can result in outsized opportunity costs, as the best market days often follow the worst days.

It is near impossible to predict the future, that’s why it’s important to plan and prepare. The advantage of owning volatility as an asset class gives investors the chance to take the road less traveled. By doing so, it gives one the opportunity to makes choices, yet minimizes regret and mistakes.


Read the full 2023 Market Outlook here.


Related Articles