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My predications for 2023
Investing is a game of probability, not certainty.
Nothing is ever guaranteed. Unknown unknowns lurk around every corner, and the game is always changing.
However, while you will never be able to predict exactly what’s going to happen in the future, current data does shine a light on what lies ahead for markets in 2023.
Here is my summarised view on the most probable direction for markets in 2023 and how to position your portfolio accordingly.
Inflation vs. recession
In my view, an overly aggressive Central Bank policy will lead to a painful period for stocks as company earnings and nominal growth falls, bringing the US into recession. This will force a necessary pivot from the Central Banks, creating buying opportunities in equities that will have already front-run the economic contraction ahead.
Stocks
As with 2022, stocks which provide an attractive income appear more reasonably valued. Investors remain less likely to fund the growth story of pre-earnings companies as a potential recession looms.
Any overall underweight to stocks in the first half of the year with a material tilt towards companies with strong and stable balance sheets should provide portfolio resilience.
More specifically, financials (Net Interest Margin improvement and balance sheet strength) and healthcare (ageing population demographics) are preferred from a sector standpoint.Bonds
The brutal repricing that came as a result of the Federal Reserve’s efforts to tame the inflation beast have brought short term treasuries back to between 4% and 5%.
For the first time in a long time, the rotation into bonds is an attractive trade. For risk-averse savers, this is a game changer as the endless search for yield is over.
I have increased my allocation to short-term Government bonds given the current interest rates on offer and uncertainties elsewhere.Real Estate
The ripple of weaker housing activity has already begun.
In the US existing home sales have dropped dramatically with November clocking the worst decline since February 2008 - down 28.4%.
This is hardly surprising given that we condensed 10-years of growth into an 18-month period as house prices jumped 40% since 2020.
While I believe there is more downside in the real estate market (~10%) as a result of the higher mortgage rate environment, the overwhelming lack of supply remains the most supportive factor. We simply didn’t build enough homes following the last housing crash to meet the demand coming from millennials reaching their household formation years.
This generational undersupply means ludicrous prices are here to stay, but the price surges we have experienced in recent years are over.What does all this mean for you?
It’s not all bad news. Valuations are in a much stronger position relative to this time last year. Once the earnings decline is fully reflected, long-term opportunities will emerge for those ready and willing to put their money on the table.
Until then, tactically chose a combination of short-term bonds and defensive equity sectors that can survive a challenging economic environment while still providing income to your portfolios. Brighter days are ahead, just not quite yet.
Now is the perfect time to set up your strategic long-term investment plan. Don't wait until the market has moved to think about your investments.
For those looking for independent investment consulting advice, please don’t hesitate to reach out.
Find my full list of 2023 predications on my website by scanning the QR code above.
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Ireland’s oldest citizen has Killarney connections
Ireland’s oldest woman met with President Michael D. Higgins at Áras an Uachtaráin this week. Máirín Hughes, who turned 109 on May 22 has strong Killarney connections. The previous record […]
Ireland’s oldest woman met with President Michael D. Higgins at Áras an Uachtaráin this week.
Máirín Hughes, who turned 109 on May 22 has strong Killarney connections.
The previous record was held by 107-year-old Nancy Stewart who died on September 10 2021.
Although born in Belfast, Máirín went to school in the Mercy Convent. Her father was a customs and excise officer and the family moved around a lot eventually coming to Killarney after spells in County Down and Dublin.
Her mother came from the Rathmore area and her father was from Newmarket in County Cork.
She attended the Mercy Convent and has, in previous interviews, recalled growing up on the shores of Lough Lein.
“Neighbours who had three children were given the job of taking me to school,” she said. “They were annoyed because the children were going to school for two or three years but I was put in to the same class as them – my mother had taught me.”
In 2021 she featured in the book ‘Independence Memories: A People’s Portrait of the Early Days of the Irish Nation’, sharing stories of being kept in school in Killarney during an attack on the RIC barracks down the road.
In 1924 she started a degree in science and a diploma in education at University College Cork, before working in the pathology lab in University College Cork’s Department of Medicine for 16 years.
last year she recalled her story on the podcast: ‘Living History – Irish Life and Lore’.
During the broadcast she talked about her parents’ membership of the Gaelic League in 1910; the Spanish Flu in Ireland in 1918; The Black and Tans in Killarney in 1921; the early days of the new Free State; Eucharistic Congress in Dublin in 1932, visiting the Basket Islands in 1929; and working in the UCC medical laboratory from 1932 until 1948.
This week President Michael D. Higgins hosted an afternoon tea event to celebrate the important role that a variety of people have and can play in different communities and Máirín was among the guests of honour.
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Philip is running over 100kms for Cancer charity
Local runner and charity fundraiser Philip Kissane is set for the biggest challenge of his career as he lines up for the Cork City Marathon on Sunday. Phillip has already […]
Local runner and charity fundraiser Philip Kissane is set for the biggest challenge of his career as he lines up for the Cork City Marathon on Sunday.
Phillip has already completed four half marathons at various locations around Killarney – all in aid of Kerry Cancer Support Group – or the Cancer Bus as it popularly called.
This is the second time that Phillip has run four half marathon and an official race for the charity.
Back in 2021 he finished with 5km Run Killarney event but his finishing race this time around is over eight times the distance at 42kms.
“We are delighted with Philip’s continued fundraising support but also with his awareness raising for the charity,” Breda Dyland, Service Manager Kerry Cancer Support Trust.
“We are getting busier all the time and still get no statutory funding so are dependent on fundraisers like Philip’s to keep us on the road. We have just put our new wheelchair accessible bus on the Cork route so Philip’s funding will be going towards the operation of this vehicle.”
Ireland’s oldest citizen has Killarney connections
Ireland’s oldest woman met with President Michael D. Higgins at Áras an Uachtaráin this week. Máirín Hughes, who turned 109...
Philip is running over 100kms for Cancer charity
Local runner and charity fundraiser Philip Kissane is set for the biggest challenge of his career as he lines up...
Game changer as Black Valley connects to 5G network
Residents of the Black Valley are enjoying 5G internet connection for the first time this week. The Black Valley...
Tiernaboul school children complete eight week French culture course
Children from Tiernaboul National School have become experts on French language and culture after completing an eight-week course. On Monday,...
Funding to tackle invasive Rhododendron in National Park
Funding of €17,000 has been allocated to tackle Rhododendron overgrowth in Killarney National Park. It is one of nine biodiversity...
