It is good practice to learn from your mistakes, but even better is to learn from other people’s mistakes. My biggest error in 2023 was the same as everyone else’s: being in the consensus that the fastest rate hikes in 40 years would cause a recession. They didn’t, but there is still deep disagreement on why—and the direction of your portfolio depends on the answer.

As a reminder, at this time in 2022, predictions of recession were the norm—and on some measures stronger than they had ever been outside an actual recession. I wasn’t persuaded by the economic models, because they paid no heed to the effects of the pandemic on supply and demand. But I thought it unlikely that the nascent stock rally would continue, because it was a bet on inflation’s coming down without the economy being hit. How likely is that? Not very. Except that it happened.