Skip to content

Investment Commentary

Unwrapping 2023’s Surprises

By Jon Henshue | Johnson Financial Group • January 05, 2024

4 minute read time

In our household, Santa often brings the fun stuff, but this year Mom and Dad had the upper hand. My daughter had steadfastly kept the same gift at the top of her list throughout the season. I repeatedly downplayed the likelihood of her getting the gift. Despite my initial reluctance, we decided to get not only the requested gift but a better-quality, more expensive version. We then packaged it in a deceptively large box. When my daughter opened the box on Christmas Day, her gaping mouth and scream of surprise was worth every penny.

Surprises can be fun … and not so fun. Let’s review a few of the many surprises investors navigated in 2023.

Bank wobbles

The first surprise unfolded in March and April when several regional banks began to wobble under rumors that they lacked sufficient liquidity to meet a growing number of depositor liquidations. The banks were caught in limbo, having used their swelling balance sheets to purchase substantial amounts of government debt that ultimately was devalued as the Fed marched forward with its campaign of interest rate hikes. In a world where customers can request withdrawals via mobile phone in a matter of moments, the velocity of the bank runs was unprecedented and led to the demise of three banks holding more than $520 billion in assets.


Another surprise during the year was the rapid introduction and adoption of artificial intelligence (AI) tools such as ChatGPT. OpenAI, the company behind ChatGPT, released the chatbot in late November 2022. Within a matter of months, the world had taken notice, and by the end of January, the platform had more than 100 million users. The growth trajectory exceeded any prior technology platform, with established platforms such as TikTok requiring nine months to achieve the same feat. Nearly every major tech company rushed to highlight their AI credentials, whether through research and development efforts, acquisition, or highlighting existing applications. Microsoft, for example, invested an estimated $10 billion to partner with OpenAI and incorporated the technology into its Bing search engine within months.

Consumer resilience

The American consumer showed remarkable resilience during the year despite significant concerns such as unaffordable housing due to higher mortgage rates, the resumption of student loan payments, and lower consumer sentiment than even during the worst of the pandemic. Despite these challenges, Americans continued to spend, contributing over 2% to third-quarter GDP growth. The strong job market has played a significant role in driving consumer spending, along with declining personal savings rates and decreasing household excess savings.

Digital assets

The resurgence of Bitcoin and other cryptocurrencies was another surprise during 2023, with Bitcoin gaining more than 150%. Bitcoin suffered an -81% plunge in 2022 under the weight of the high-profile collapses of stablecoin TerraUSD and major trading platform FTX, bringing the rest of the crypto world with it into a “crypto-winter.” SEC Chairman Gary Gensler repeatedly opposed the approval of a Bitcoin ETF, but crypto enthusiasts found hope as financial juggernaut BlackRock joined a growing backlog of applications to launch the first US-based spot Bitcoin ETF. A US Court of Appeals handed crypto-enthusiasts further reason for optimism of an eventual ETF approval in August when it ruled against the SEC in a case brought against it by crypto leader Grayscale.

Magnificent 7

Perhaps the biggest surprise of 2023 was the significant concentration and outperformance of the so-called Magnificent 7 (Apple, Microsoft, Amazon, Nvidia, Alphabet, Meta, Tesla). Already the largest companies in the history of the world, the stocks of these businesses exploded during 2023 and, led by Nvidia's 239% increase, gained an average of 111%. The result of such phenomenal stock appreciation was to increase the value of these companies by more than $4.1 trillion, the equivalent of the GDP of Germany's entire economy (the fourth largest in the world). Several of these companies benefitted from their actual or perceived advantages in AI, while investors also found refuge in their sizable balance sheets and cash flow generation.

Celebrating Christmas with my family and a year's worth of market events was memorable and surprising. I'll happily take many more moments of excitement with my daughters, though I’d be content with a little bit more calm in the markets. With an election year and the end of the Fed rate hiking cycle upon us, I'm not so certain I'll get my wish.

Subscribe to Our Investment Commentary

We deliver unbiased guidance that's not in our best interest – it's in yours. Subscribe and receive our investment commentary straight to your inbox.

This information is for educational and illustrative purposes only and should not be used or construed as financial advice, an offer to sell, a solicitation, an offer to buy or a recommendation for any security. Opinions expressed herein are as of the date of this report and do not necessarily represent the views of Johnson Financial Group and/or its affiliates. Johnson Financial Group and/or its affiliates may issue reports or have opinions that are inconsistent with this report. Johnson Financial Group and/or its affiliates do not warrant the accuracy or completeness of information contained herein. Such information is subject to change without notice and is not intended to influence your investment decisions. Johnson Financial Group and/or its affiliates do not provide legal or tax advice to clients. You should review your particular circumstances with your independent legal and tax advisors. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared. Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. Certain investments, like real estate, equity investments and fixed income securities, carry a certain degree of risk and may not be suitable for all investors. An investor could lose all or a substantial amount of his or her investment. Johnson Financial Group is the parent company of Johnson Bank and Johnson Wealth Inc. NOT FDIC INSURED * NO BANK GUARANTEE * MAY LOSE VALUE