812-853-0878  |  800-355-9624

July 1, 2023

Dear Client:


Returns for the major stock indexes in 2023 and the current bond and money market yields are as follows:


Index    YTD 2023
Dow Jones Industrial Average     4.84%
S&P 500    16.93%


Fixed Income Yields     1 year 2 year 5 year 10 year 30 year
Municipals 3.01% 2.92% 2.61% 2.55% 3.57%
US Treasuries 5.39% 4.90% 4.16% 3.84% 3.86%


Fidelity Government Cash Reserves Money Market Fund 4.88%
Fidelity Money Market Fund Premium Class  5.06%


Happy 4th of July!  The market indexes rebounded well in the first half of 2023.  The S&P 500 is up 16.93%, while the Dow Jones Industrial Average is up just 4.84%.  The difference is primarily attributable to the significant outperformance of just seven stocks which comprise nearly 25% of the index: Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta.  Aside from Apple and Microsoft, these top names of the S&P 500 are not in the Dow Jones Industrial Average index.  As of June, these names have increased more than 80% on average, while over 70% of the S&P 500 underperformed the market, and more than 200 components have negative returns for the year.  Of the eleven economic sectors, four are negative for the year, while four are barely positive, and nearly all of the market’s outperformance has come from the technology, communication, and consumer discretionary sectors.  The market’s performance has clearly been very concentrated this year; but if a bull market is defined as being up 20% from its lows, then we have entered a new bull market.

The equity markets continue to climb the “wall of worry.”  This age-old axiom refers to how markets can keep climbing despite seemingly ever-increasing concerns.  Perhaps more than ever, we are humbled by markets.  The infamous yield curve has preceded each of the last five recessions and is at its most inverted since 1980.  Moreover, interest rates have risen at their fastest pace since the early 1980s.  With two more interest rate hikes likely before year-end, many bank balance sheets will become further problematic.  Higher interest rates inevitably lead to lower asset prices and fewer loans.  Combine this with the estimates of $2.5 trillion in commercial real estate loans coming due over the next few years, and we hesitate to be too bullish in the short run.

While every stock transaction has a seller and a buyer, in rising markets, there are more buyers than sellers; hence, the bull market case also has a compelling story.  The buy-siders have become enthusiastic about the capabilities of generative AI (Artificial Intelligence).  Some estimates predict AI’s impact on the global economy will be as much as 15 trillion dollars within seven years.  Impossible to know, but the point is that AI is expected to significantly impact every segment of the economy.  Perhaps the most high-profile retail use today is Microsoft’s Chat-GPT, which accumulated over one million users in just five days, an unprecedented accomplishment.  The bull market case is also supported by record US employment, record stock buybacks, a resilient consumer, continued pent-up demand, and inflation returning to normal.

As we approach our 30th year in business, we are excited to announce that my oldest son, Evan, has joined our firm.  He graduated in May with a degree in Financial Planning from Purdue University and marks the 5th generation of the Lynch family to work in the investment business.

My great-grandfather, James O. Lynch, began his 41-year career as a stockbroker with Thomson & McKinnon in 1915.  A newspaper article honoring his retirement hangs in our office and is a source of pride and a continual reminder of his legacy.  The stories of my great-grandfather are of how he helped thousands of local investors.  The stock quotes of his time were generated through the telegraph, and his firm executed stock orders using the Morse wire.  He proudly claimed, “We weathered the storms,” which, upon reflection, seems an understatement, having served clients through the Roaring 1920s and Great Depression.

As I turn 50 years old this week, I am humbled by my son’s desire to join us and eternally grateful for the example of those who preceded me.  I can only imagine the boom-and-bust cycles and adversity my great-grandfather endured several generations ago.  He exemplified many timeless values: perseverance, work ethic, and decency, to name a few.  Moreover, he shared his love of the outdoors and Minnesota fishing, which continues five generations later.  His leadership gave us more than I bet he would have imagined, and though I never met him, I am confident he would be proud to see his great-great-grandson become an investment advisor.

At LYNCH & Associates, we continue to add more bonds to portfolios as rising interest rates have finally made bonds more attractive.  We are pleased to see the steady rise in money markets, now yielding more than 5% for individuals.  We will continue to maintain our dividend and value bias in our equity models.  In the coming quarters, we will add more high-quality growth and dividend names to increase diversification within our stock models.

We encourage our clients to remain focused on their long-term investment goals.  Our team is here to provide guidance and support as needed, and we remain committed to helping you achieve your investment objectives.  We thank you for your continued confidence in LYNCH & Associates.



Ryan T. Lynch, CFP® ChFC®



Form ADV Part II and III of the LYNCH & Associates Uniform Application for Investment Advisor Registration and the LYNCH & Associates Code of Ethics are available to all clients at any time.  If you would like to receive a copy, please contact Jennifer Farless at (812) 853-0878 or [email protected].


Office:  10644 Newburgh Road, Newburgh, IN 47630