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The Market At a Glance: Gloom and doom January

The Market At a Glance: Gloom and doom January

Tuesday, January 10

A heavy guitar riff, a thumping drum beat that follows a few bars later, the electrifying voice of Mike Jagger that starts chanting goes the opening of "Doom and Gloom" the song released in 2012 by the Rolling Stones for the 50th anniversary of the band.

"Gloom and doom" that's what financial forecasts seem to be about as 2023 kicks off. Most banks have released their outlook for the year to come, and the consensus is that it is a matter of months before a recession hits developed economies.

Let us say it straight out: forecasting is not our cup of tea. We also seriously question the ability of any economist to predict the course of market events for an entire year (how many investment strategists saw 2022 coming?). We'd rather stick to facts and try to form views one data point at a time.

So what do we know so far?

Yes, there is mounting evidence of an impending recession - or at least an economic slowdown. But this slowdown should not come as a surprise. It is the price we all have to pay to avoid inflation, according to central banks (you may disagree, but that won't change their mind). Their strategy is clear: reduce demand by making it less easy for people to borrow and spend. Their weapon: higher interest rates. 

So far, the plan seems to work. We saw early indications that inflation is coming down. The collateral damages are more difficult to assess. What was hot last year is taking a plunge (digital assets, tech, thematic investments, etc...). Bonds, especially the ones issued when rates were low, have known one of their worst years in a century, and our pensions took a hit. All the savings we accumulated during the pandemic are shrinking, and real estate markets are starting to shake. The diet is painful but we are burning "excess fat" for the moment.

The key question is: can the diet continue without depriving us of essential nutrients? A healthy job market, companies that are growing and markets that are functioning well are what we need. Put too much pressure on these and the consequences could be dire. This is what economists fear the most.

But let's not get swept away in “doom and gloom” just yet. There are at least two arguments that must be factored in:

  • First, let's not forget that economies - and the agents that make them (i.e. us) - are living things always self-organizing. Think about it, in the past two years or so, we had to adapt to a pandemic, to inflation, to a war and more recently, to a reduced supply of energy. We can get used to higher rates. Also, each period change provides opportunities.

  • Second, markets and economies operate in different time zone. Markets have already partially anticipated a recession that has not yet officially started. We say "partially" because asset prices are still too high, in our view, should a deep recession materialize. But the point is that investors already have a brand new set of options to play with. Safer assets are becoming attractive again, and markets are offering bargains for more risky investments. Isn't it a better paradigm than what we had for the past ten years?

So yes, a more gloomy outlook means being more selective with our choices, but that's not a bad thing as long as we have options. That's how we will navigate markets this year. Like Mike Jagger, "all we hear is gloom and doom...but we will take our chance".

Demystification room.

Did you know that the Swiss National Bank (SNB) is the only central bank in the world listed on a regular stock exchange? You can buy a share of the SNB like you can buy a share of Nestlé or Roche. The stock can pay a dividend too. The dividend not exceeding 6% of the share capital is paid from the net profit. In the case of the SNB, where do profits can come from?

For this you have to understand what the Swiss National Bank owns:

Any profit will come from the assets. And sometimes it is not a profit but a loss. The 142 billion Swiss Francs loss reported by the Swiss National Bank about a month ago generated a lot of comments in the press and on social media. But when you look at what the SNB has on its balance sheet, it is barely a surprise. Ultimately, the SNB's assets are not that dissimilar to those investors like you, and I hold in our investment portfolios, brokerage accounts, 3rd pillars, pension assets... it just contains more foreign currency investments.

Let’s talk wealth

Planning your journey and defining investment goals with Daniel Glückler

How do personal goals and objectives affect an investment strategy? And how can we define them clearly? To explore this topic further, we spoke to Daniel Glückler, Wealth Advisor at Alpian, and discovered an effective framework to define financial goals. And life goals. 

To obtain the best possible investment strategy – one that’s perfectly tailored to our client – we must first understand the client’s financial profile, which includes their risk capacity and tolerance and their overall financial behavior. But we incorporate the client’s life goal or goals because they determine how, when and how long their money needs to stay invested to generate an amount that matches their goals.

Anyone trying to define his wealth goals can ask himself these questions:

  • Which phase of life am I in?

  • What are my goals right now?

  • Which goals are more important than others?

  • Which of my goals requires financial planning?

  • When do I want to reach each goal?

  • How much money do I need to reach each goal?

If we look at the lifecycle of most people, we see that there are certain phases of life with different activities and objectives. Every client will have different priorities or challenges based on individual circumstances and the phase of life they’re in. The framework below allows you to think about these goals in a structured way and factor in events that could be influential at each stage – for example, having a child, getting promoted, or receiving an inheritance. This enables clients to think of the strategy and rules to ensure that they reach their goals.

The full interview is available on

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