The year started with an upward trend for stocks and bonds through February. The S&P 500 shot up 9.3% by the end of February, and growth-oriented and technology stocks led the way. Confirmation of the trend did not last, and by mid-February, the bullish momentum turned into a sideways market of ups and downs.
As anticipated in our Final Reflections and Forecast 2023, markets are adjusting to the conflicting economic data. On the one hand, economic data related to jobs, retail sales, and mortgage applications have strengthened, confirming a solid economic backdrop for equities to thrive.
- Recent jobs and payroll reports are strong (2nd strongest since 1951).
- January retail sales are strong (2nd strongest January since 1993).
- January mortgage applications have strengthened since the end of 2022.
However, these positives are a double-edged sword, as we noted:
“…we first need to brace for more pain in the short term. The source of the pain would come from accelerated fears about rising inflation. “
“…..it is important to remember that inflation data does not move linearly, and certain data points will likely emerge and spook the financial markets.”
Nevertheless, it is essential to begin rebuilding our equity position, and we have increased stock exposure while reducing bond and real asset exposure. Below is a history of our broad adjustments to ETF strategies since the beginning of the year.

Adjustments to our stock strategies follow the same narrative, with bullish trends across every sector, except utilities. Accordingly, we are transitioning to include more growth-oriented technology stocks in Fortis Leaders 50 and Alpha 40 stock strategies. It would be premature to abandon all of our defensive positions, and our game plan is to “play in the middle.” At the same time, it is tempting to chase the return of the S&P 500; we will accept capturing some of the upsides as we carefully transition away from our defensive stance. In short, we did not capture all of the gains in the first two months of the positive performance of the S&P performance by design. Capital preservation is still paramount. Our playbook will focus on long-term positive returns with reduced volatility and take a step-by-step approach to increase the risk for better returns.