Welcome to our January 2024 Viewpoints, a monthly bulletin from PDS Planning to our valued clients and friends. Our goal with each issue of Viewpoints is to provide you with a wide variety of perspectives on life and wealth. Feel free to share with others.

By Drew Potosky, CFP®,
Posted: 1/24/2024

Better than Average

Despite posting 6 straight months of negative returns last year (May thru October) bonds still finished 2023 with an above average return. Since 1926, US bonds have posted a 5% annual return. US bonds in 2023 provided investors with 5.5%. A slight difference, but consider the year bonds had in 2022 and the 6 months of negative returns. I think investors will gladly take above average. (Source: BlackRock)

A chart showing average US bond returns since 1926 with 2023 having an above average return.

A chart showing 6 straight months of negative returns, following by two big months of positive returns in US Bonds.

Options have not looked back

Since exploding in popularity during 2020 (see our post from August, 2020), options have not looked back. From 2019 to 2020, total equity options volume grew from 4.4 billion to 7 billion, a 58% increase and a new annual volume record at the time. The data has been reconciled for 2023 and a new equity options volume record has been set for the 4th year in a row. Options volume exceeded 10 billion contracts in 2023, a 44% increase since 2020. (Source: The OCC)

Average daily options volume

That’s Not All. 2023 Was a Big Year

A “global operator of electronic marketplaces for rates, credit, equities and money markets,” TradeWeb reported average daily trading was $1.44 trillion for 2023, a year over year increase of 27.6% and the highest average they’ve recorded. The pause in rate hiking played a big role as fixed income volume surged to new volume records as investors snatched up higher yielding bonds with anticipation of rates being cut in the coming year. (Source: TradeWeb)

Reminder – It’s an Election Year

2024 is a presidential election year and the stock market tends to be flat the first half of the year. One thing the markets hate is uncertainty and the presidential election tends to be a pretty big one. Once the winner is locked in, though, markets have rallied as seen by the positive 3rd and 4th quarters. (Source: BlackRock)

Average return per quarter during an election year.

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