By Benjamin M. Lavine, CFA, CAIA, RICP

Chief Investment Strategist, Freedom Advisors & Chief Investment Officer, 3D, a Freedom Advisors company

Investors Flee for the Safety of Long Duration Assets

“People who invest make money for themselves; people who speculate make money for their brokers.”

– Famed Value Investor Benjamin Graham

 “For my part I know nothing with any certainty, but the sight of the stars makes me dream.”

– Vincent Van Gogh




The first quarter of 2023 is now in the books and can be somewhat bluntly characterized by two extremes in investor sentiment: extreme highs for long duration assets (technology stocks trading at high valuations, long-term maturity debt securities, precious metals such as gold) and extreme lows for everything else (value stocks, especially beaten-down bank stocks, small caps, cyclical commodities). Essentially, the first quarter of 2023 saw a reversal of 2022 which saw inflation fears driving investors to favor cyclical value stocks and commodities while reducing exposures to long-duration assets such as expensive growth stocks and long maturity debt carried at historically low interest rates. The first quarter saw investors flee for the safety of long duration assets, whether expensive growth technology stocks viewed as immune to recessionary pressures or long maturity fixed income in anticipation of deflationary forces that would compel global central banks to ease monetary policies.

This quarter’s backdrop for growth versus value investing could not have produced a greater dichotomy of distinctive odors; the sweet perfumy growth potential of generative artificial intelligence1 (and the semiconductor investments needed to power such initiatives) versus the noxious fumes of banks2 and insurance companies, whose balance sheets are overloaded with low interest-bearing assets, leaving them less able to compete for short-term capital that is fleeing for higher yielding money market funds and U.S. Treasury Bills. For the 1st quarter, technology growth stocks generally rallied more than 20% while regional bank stocks sold off more than 20%. It was truly a tale of two market fortunes this quarter. 

Download 3D 2023 Q1 Market Commentary Summary

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1 “Generative AI Market Observes Strong Growth Potential, With Projected Market Size of USD 151.9 Bn by 2032”
2 “After SVB Collapse, Are Bank Stocks a Buy or a Liability?”