This paper establishes our rationale for improved returns across most asset classes in 2023.

2022 was a year of major change for our long-term capital market assumptions. Valuations for both stocks and bonds started 2022 at very high levels, which implied muted future returns. After 2022’s selloff in both, valuations are now more favorable and imply higher future returns for both asset classes.

Cash, which started the year yielding close to zero, was all the way up to a yield of about 4.0% as of this writing in December. The 10-year Treasury started the year with a yield of 1.5%, traded above 4.0% by late 2022 and stood at about 3.8% toward year end. The S&P 500 Index began the year with a forward price-to-earnings valuation ratio of 21 but was trading at a much more reasonable 17 at year end.

Consequently, the 2023 update of our long-term outlook calls for better returns across most asset classes. However, expected lower potential economic growth rates due to aging demographics and a slow-growing labor force still present headwinds for future returns. While off historically high levels, elevated corporate profit margins remain a potential headwind for future stock market returns.

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This presentation has been prepared by Janney Investment Strategy Group (ISG) and is to be used for informational purposes only. In no event should it be construed as a solicitation or offer to purchase or sell a security. Past performance is no guarantee of future performance and future returns are not guaranteed. There are risks associated with investing in stocks such as a loss of original capital or a decrease in the value of your investment. For additional information or questions, please consult with your Financial Advisor.

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