Traphagen CPAs & Wealth Advisors is a comprehensive financial services firm comprised of accounting, tax and wealth management serving individuals and families throughout the country.
For over 50 years, Traphagen CPAs & Wealth Advisors has served as a dynamic leader and provider of financial services. Unlike traditional financial advisory firms, our accounting team specializes in taxation, financial reporting & consulting services, including financing and M&A; our wealth management team manages client investment assets and provides comprehensive estate, tax, and financial planning services.
As Certified Public Accountants and Registered Investment Advisors, we are uniquely positioned to be your trusted financial advisors. Traphagen’s fiduciary team combines the value of their individual credentials to achieve a comprehensive view of your business and personal goals.
2023 Market Review & 2024 Outlook
2023 Economic & Market Review/Comments:
After a grim 2022 (stocks and bonds returned between - 15% and - 20%), inflation pushing 8% for a time, a European war, and much higher interest rates, the stage was set for an even more challenging 2023. Almost all economists, asset managers, major banks, and even the FED thought chances of a recession were elevated (if not probable) coming into 2023. Traphagen was no exception in sharing this view. As we reviewed earnings expectations, the likely impact of much higher rates, an inverted yield curve, quantitative tightening, and high inflation we were cautious. We recognized however, there are no ‘sure things’ in the markets, so we constructed our client portfolios in a way that would provide significant and meaningful protection if we did get the much-anticipated recession, while at the same time enabling our clients to participate in a bull market. The below excerpt was taken word for word from our 2022 review newsletter written one year ago.
“With this backdrop, we are cautious, but think bonds will have a good year and stocks will have a materially better 2023 than 2022…If we see much lower inflation, muted (but still positive) earnings/economic growth, and get a ‘soft landing’ all pieces of our portfolio should perform well, and we would expect total returns in the upper single digits or more for most clients.”
Fortunately, we avoided a recession (at least to date) and the above referenced scenario played out with all but the most conservative Traphagen clients returning between 8% and 20% for the year.
Despite the continuing rise in rates, a regional banking crisis, and nearly flat corporate earnings, investors were excited about much lower inflation and continued government fiscal support in 2023. In response to this, stocks were bid up significantly from around 16X earnings in late 2022 to the current level of around 21X. This increase in stock valuation translated to a return of + 22% for the global stock market (ACWI) with US stocks far outperforming foreign stocks yet again.
The gains in the stock market were robust, but extremely concentrated in just a handful of mega cap technology companies. If we isolate just US large cap stocks using the SP500, the difference in performance of the entire index was + 26%, while the other 493 companies in aggregate only returned around + 7%. This has led to the most concentrated US stock market in recent history.
Traphagen CPA's & Wealth Advisors has been named #20 in the Top 100 Financial Advisors National Ranking by CNBC
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