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When Wall Street and Government Analysts “Get It Wrong,” What Can You Do to Protect Your Wealth?

AngelaRoberts

Written by Angela Roberts

Jan 5, 2023

“Almost everyone on Wall Street and in Washington got 2022 wrong.” That’s the lede in a December 26, 2022, article by The Wall Street Journal, and it got me thinking: If so many people were so wrong about 2022, what does that mean for the new year ahead?

Multiple predictions for 2022 markets were off the mark.

Man looking concernedly at laptop

The Wall Street Journal article continues by pointing out several incorrect predictions, from the Federal Reserve saying that the surge in inflation that began in 2021 would be transitory (instead it reportedly rose to triple the central bank’s full-year forecast) to Wall Street analysts predicting a “so-so year” for financial markets, which instead are experiencing a significantly down year, with the S&P 500 “on course for its biggest annual loss since the 2008 financial crisis” and bonds “headed for their worst year on record.”

The lesson here is simple: Financial markets can be unpredictable, so it may not be in our best interests to put our faith (and financial decisions) entirely in the hands of analysts. Instead, it may be safer to keep an eye to the ground and an eye on financial news yourself and take steps to protect your portfolio in the event of market uncertainty.

Analysts and executives don’t agree on what’s in store for 2023.

Business man and woman with arms crossed and data charts in background

I enjoy doing research before making any big decisions. It’s important to me that I know as many of my options as possible and make educated choices. But 2023 is already proving to be a challenging topic for many: No one seems to agree on what will happen to the financial markets.

As the Wall Street Journal article points out, “The [Federal Reserve] has signaled it expects to keep raising interest rates, and yet traders have been pricing in rate cuts.” Meanwhile, “Company executives are sounding the alarm about a potential recession, but economists at some banks, including Goldman Sachs Group Inc. and Credit Suisse Group AG, see the U.S. economy avoiding a downturn in 2023.”

So which is it? Will rates continues to rise or begin to fall? Are we headed for another recession, or will the United States experience economic growth in 2023? There may seem to be no clear answer here, but one thing is clear: 2023 looks to be another year of economic uncertainty.

When the only certainty seems to be uncertainty, precious metals may offer stability and peace of mind.

Between the start of 2022 and December 26, 2022, the S&P 500 had fallen 19%. That’s a significant drop for any portfolio, but could be even more impactful for those whose retirement portfolios are allocated heavily to stocks. As we discuss in our special report on the “Retirement Risk Zone,” a heavy hit to your savings within 10 years of retirement in either direction may be disastrous if your portfolio isn’t sufficiently diversified.

But while some stocks are down nearly 20%, gold seems to be exiting the year at almost the exact spot it entered—as of this writing, gold is down only 0.09% since the start of 2022. That’s less than a tenth of a percent down from the start of the year, meaning those who diversified their portfolios with gold may have entered 2023 in far better economic shape than those who held a stocks-only portfolio.

This does not mean that a portfolio should be allocated only to gold or other precious metals. Rather, physical precious metals can help balance out your portfolio’s level of risk exposure. If the stock market comes roaring back in 2023, we’ll all celebrate together. But with so much uncertainty surrounding the coming year, I’ll be glad to have a steady base of precious metals helping to stabilize my portfolio.

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