2023 Fourth Quarter Insights

October, 2023

Edition: 32

The 4 Disciplines of Investing for Retirement and Wealth Creation

  1. “Investing is a marathon and not a sprint.”
  2. “Do no harm.”
  3. “Knowledge creates success; stay calm, objective and long-term oriented.”
  4. “Choose carefully what you read and to whom you listen.”

“Everything is based off of interest rates… It’s a huge, huge, huge gravitational pull and affects what I am doing.”
– Warren Buffett

The quote above is especially true today. Interest rate levels and risk assets go hand in hand. I often say that monetary policy is a key driver of risk assets. Let us flashback to my 2020 Second Quarter Insights at the very height of the financial markets meltdown where I penned “Speed, Stimulus and Support” would be the key to fighting the Global Pandemic, as well as the key to supporting financial assets which were in freefall. The US government unleashed a massive amount of stimulus that created the desired result on risk assets like bonds, real estate and equities, all soaring in price. What a good time it was to be an investor. Fast forward today and the Federal Reserve is operating a single mandate and that is the battle to fight inflation. The good news here is that inflation is lower and moving lower, though at a slow pace, and overtime should return to normal. The not-so-good-news in the short term is that monetary policy has moved the Federal Funds rate to 5.25% – 5.50% with the possibility of moving slightly higher over the next few meetings. But this is not all; the Federal Reserve, through quantitative tightening (QT), is also unwinding its enormous balance sheet of bonds purchased in 2020 during speed stimulus and support of the economy, placing additional pressures on interest rates in many markets. Interest rates are now near 20-year highs in residential mortgages. Interest rates are also higher in US Treasury bonds in all maturities this year with the US 10-Year Treasury Bond hitting the highest interest rate level since 2007. Oh, I also forgot to mention that since the beginning of the Ukraine conflict, China has sold $200 billion in US Treasuries in the last 17 months. With the Chinese economy softening, especially in real estate, and the Ukraine conflict continuing, I would expect them to keep selling and putting additional pressure on interest rates. Now, I do not write this to scare anyone, just to educate and make a simple but important point — monetary policy can have a profound effect on risk assets. It does not mean the markets will collapse; it simply means that it will take some time and multiple gyrations in many asset classes for markets to digest this restrictive monetary policy. Over the intermediate to long term, we are very confident that risk assets, like equities, will be higher. But in the short term, the markets will need to adjust to this tighter monetary policy.

Welcome to my insights and I hope you find them educational and informative as you invest for retirement, during retirement and wealth creation.

Pros and Cons

Below are some of the items we will be watching during the fourth quarter and into the first quarter of 2024.


  • Q4 seasonality
  • The US employment picture appears to be very healthy in the US
  • Inflation appears to have peaked
  • The consumer appears healthy
  • The emergence of AI technologies


  • The price of WTI Oil is now up 31% over the last three months. Diesel fuel is up 32% and Jet Fuel is up 38%.
  • 30-year mortgage rates have soared to over 7.75% nationally and the highest levels last seen since 2007
  • Strong US dollar
  • Disinflation momentum has slower
  • Higher rates for longer
  • The Conference Board of Leading Economic Index is now negative for 17 consecutive months

The S&P 500 and the Equal Weight S&P 500

There are currently 503 companies in the S&P 500. Yes, that is correct, 503 companies. The S&P 500 is a market capitalization index that is dominated by roughly seven mega-cap technology companies that comprise a much larger index weighting than the 493 smaller market capitalization companies. The S&P 500 Equal Weight Index equally weights all stocks in the S&P 500. This year, the divergence between indexes is very large with the S&P 500 up 12% while the equal-weighted index has only gained a tiny 1%. This large performance disparity could be pointing to a market environment that is less healthy outside of the largest seven companies.

S&P 500 – Black Line
S&P 500 Equal Weight – Red Line

TIAA (also known as There is an Alternative)

With the S&P Dividend Yield only 1.62%, trading at 22 times earnings, and the Two-Year Treasury Bond yielding 5.05%, fixed income is beginning to look much more attractive than it was only 12 months ago. Below is the list of current yields on US Government Bonds. You cannot tell me that these rates are not competition for riskier assets. The notion of higher rates for a longer period appears to be creating an alternative to riskier assets.

Source:CNBC 9/29/3023

Ten-Year Treasury Yield vs. The S&P 500 Index

The recent increase of yields for Ten-Year Treasury Yield (Green) is having a negative effect on the S&P 500 (Red).

Secular Bull Market

Over the intermediate to long-term, we believe we are still in a large secular bull market. We also believe that over time, the S&P 500 will resume its secular bull market higher and eventually take out its 2022 highs. But, as always, we want to remind our readers that investing is a marathon and not a sprint; time and patience are extremely important in investing for retirement and wealth creation.

Nicholas W. Sergio, AIF®


Founder & Chief Investment Officer
Banyan Wealth

Registered Principal & Financial Advisor

2024 RJFS Leaders Council Member



The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Dow Jones Industrial Average (DJIA) commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2000 smallest companies in the Russel 3000 Index, which represents approximately 8% of the total market capitalization of the Russel 3000 Index. BPS stands for Basis Points and refers to a common unity of measure for interest rates, one basis point is equal to 1/100th of 1% or 0.01% it is used to denote the percentage change in a financial instrument. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of capital might occur. All investing involves risk and you may incur a profit or loss of capital. There is no assurance any investment strategy will be successful. All information, data and analysis provided in this report is for informational purposes only and is not a recommendation to buy or sell any security. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete; it is not a statement of all available data necessary for making an investment decision and it does not constitute a recommendation. Any opinions are those of Nicholas Sergio and not necessarily those of Raymond James and are subject to change without notice. Raymond James does not offer tax advice and services. You should discuss any tax matters with the appropriate professional. Holding investments for the long term does not insure a profitable outcome. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. High-yield bonds are not suitable for all investors. The risk of default may increase due to changes in the issuer’s credit quality. Price changes may occur due to changes in interest rates and the liquidity of the bond. When appropriate, these bonds should only comprise a modest portion of a portfolio. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.* Membership is based on prior fiscal year production. Re-qualification is required annually. The ranking may not be representative of any one client’s experience, is not an endorsement, and is not indicative of advisor’s future performance. No fee is paid in exchange for this award/rating.


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