Page 37 - Investment Advisor February/March 2023

Conclusions

PORTFOLIO PERSPECTIVES
By Dinah Wisenberg Brin

Bob Doll’s 10 Predictions for 2023,

Evaluation of His 2022 Outlook

The renowned forecaster’s main theme for this year: The Federal Reserve
calls the shots.

he new year brings ongoing LOOKING BACK
economic uncertainty after As a “year for the history books” draws
Tnear-record market volatility to a close, Crossmark Global Investments
and a hostile environment for investors Chief Investment Officer Bob Doll report-
in 2022, Bob Doll, Crossmark Global ed in December that the firm appears to
Investments chief investment officer, have been on the mark with most of its
said recently. “The key economic ques- 2022 market and economic predictions.
tion for 2023 is whether central banks “After stocks and bonds both declined
will be able to bring down inflation to for each of the first three quarters — not
acceptable levels without a recession,” seen in 50 years — the fourth quarter
Doll wrote in his outlook for the year. rally was welcome,” he wrote in a report.
Among other views, Dolls expects a 3. Fed funds reach 5% and remain “The rise in interest rates and compres-
relatively weak U.S. economy. “Beyond there for the balance of the year. sion in equity valuations stemmed from
the inflation dynamic, we remain con- 4. Earnings fall short of expectations the worst inflation in 40 years, even as
cerned about potential political and eco- in 2023 due to cost pressures and rev- earnings estimates improved for the first
nomic shocks that could impact the U.S. enue shortfalls. six months of the year.”
and global economy via higher uncertain- 5. No major asset class is up or down Circumstances as of Dec. 19, 2022,
ty and/or tighter financial conditions.” by a double-digit percentage for only the were that the firm was likely correct in
As central banks raised interest rates fourth time this century. 7.5 of 10 predictions, consistent with its
to wrangle soaring inflation, 2022 was 6. Energy, consumer staples and 7.0 to 7.5 long-term average, Doll wrote:
the first year in nearly 50 that stocks financials outperform utilities, tech- “Looking ahead to 2023, the big invest-
and bonds both had negative returns nology and communication services as ment question is whether or not the U.S.
for the first three quarters, he noted. “At value beats growth. experiences a recession. We think that
the beginning of the year, we expected a 7. The average active equity manager call will depend on whether the Fed
down year, but not a 25% bear market,” beats the index in 2023. sticks to its goal of a 2% inflation rate —
Doll said. Taking the unknowns into 8. International stocks outperform which will require more tightening and
account, the Crossmark CIO issued his the U.S. for the second year in a row — cause a recession with high probability —
prognostications for this year. the first time since 2006-2007. or acquiesces to a 3-4% rate,” in which
1. The U.S. experiences a shallow 9. India surpasses China as the world’s case a soft landing may be possible.
recession as real GDP is in the bottom largest population and is the fastest- “In either event, earnings estimates
10 of the last 50 years. growing large economy. are too high which probably puts a lid on
2. Inflation falls substantially but 10. A double-digit number of candi- significant upside to equities,” he added.
remains above Fed’s target. dates announce plans to run for president. 1. Half correct: U.S. real growth and

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