Referee, call the game

We're on the verge of closing the first half of 2023 and global stock markets exceed 10% returns in dollars while Chilean stocks reach 19% in pesos. On the bond side the result is more modest: locally we've seen returns somewhat below 2% while in dollars fixed income achieves yields of between 2.5% and 3.7%.

With this good performance, it's tempting to—in soccer jargon—“ask the referee to end the 2023 match.” But is this the best strategy?

There are at least 3 reasons to remain optimistic heading into the second half of the year. First, after years as bad as 2022 (-20% U.S. stock market), it's more likely to have returns above the historical average.

Second, for bonds, rates in USD and CLP/UF remain well above their averages of the last 10 years.

Finally, the levels of implied risk in the markets (VIX index) are at lows not seen since before the pandemic.

We can't guarantee that the second half will be as good as the start of the year, but we do know that discipline—not market timing—is the best strategy to meet long-term investment objectives.

This column was originally published in La Segunda: https://digital.lasegunda.com/2023/06/27/A/QS4A23CQ#zoom=page-width