Given the last twelve months of crazy including stock market losses, hawkish rate hikes, currencies at risk, geopolitical unrest, and other sketchy investment news, predictions for 2023 are hard to make. According to TipRanks Lab, most of the key markets sectors are down including communications, consumer discretionaries, consumer staples, basic materials, financials, healthcare, industrials, real estate, and technology. Even so, take a look at some positive areas for investors to watch in terms of emerging markets in 2023:
Slowing Rate Hikes. A slowing of US rate hikes and in turn a drop in inflation are expected to help emerging markets make a comeback. Economies in current development are hopeful for growth even while recession fears are still expected in the first half of the year.
Monetary Loosening. While the current US economic outlook has investors and consumers alike continuing to tighten their spending during an ongoing cost-prohibitive period in terms of fuel, living expenses, food, taxes, and more, there is hope for monetary loosening as some areas of impact improve in mid to late 2023.
Some Markets are UP! Believe it or not, some markets continue to be up since 2022. Energy is up a whopping 50.6%. The energy sector is in fact the best-performing on the S&P for last year. While we don’t condone the geopolitical instability and sanctions on Russia, it has helped the US energy market, as gas, oil and coal prices have skyrocketed resulting in big profits. 2023 could show the same results.
Utilities are up a small .04%. While most other markets are down, this shred of good news is hopeful. The utilities sector is holding their own as businesses and households alike are still able to pay increasing electric, gas and water bills, with a small bonus in slow-paying dividends.
A China Reopening. A China Covid-19 reopening is hopeful even as rumors of other virus outbreaks loom. This is critical since, according to Statista, China’s share of global gross domestic product (GDP) in 2021 was 18.56%, with a growth rate of 3.2% in 2022. This reopening would boost consumption as well as investments given they have the world’s 2nd largest economy. They are shown to be saving at greater rates, which will change when consumers are able to get out.
From Bear to Bull. While the stock markets are on record as mostly bearish over the last year, they seem to be emerging somewhat even while remaining off by double digits. While bonds typically help in a bear market, the interest rate hikes have not helped. With some improved investor sentiment over a handle on inflation, there is a light at the end of the tunnel. It may be possible for the markets to go from bearish to bullish or for investors to take critical steps to hedge against inflation; thus a case for precious metals.
Savings Bonds Alive and Well. When inflation looms, there is a hopeful prospect in savings bonds (particularly series one savings bonds). Last April, the bond rate rose to a historic 9.62% in contrast with a 15% year-to-date S&P decline. Those that locked in on that bond rate made an impressive nearly one billion in series one bonds late in the year. The bond rate of 6.89% with a year lock-in is still possible through April 2023.
Careers Aplenty. Even while massive year-end layoffs for the major players such as Amazon, Twitter and Lyft have been devastating and the real estate market has done the same, there is hope for hiring in 2023. With the shoring up of high-market overspending, it is possible that the US labor market could make some comeback later in the year. The job possibilities for cross-state movers along with college grads are endless.
Alternative Investments. When times are tough, the population seeks alternative investments (most any investment other that stocks, bonds and commodities) in a more diversified portfolio. This is a time when investment portfolios undergo a thorough review to ensure financial security for the future. Financiers are looking at net worths, timetables, and risk tolerance, to name a few. When investments outside of traditional stocks, bonds and commodities are pursued, those such as gold and silver, there’s a chance for lessened volatility among savers. It is also possible that the performance of such alternative assets could outweigh higher costs of traditional assets.
Some advantages to alternative investments: 1) they do not usually correlate to the volatile stock market, 2) they may offer some alternate tax benefits, 3) the rate of return has the potential to be higher depending on the state of the market, and 4) personal investors have greater control on more sophisticated investments.
Historically, volatile periods are some of the best to refresh financial portfolios and consider a gold and silver diversification plan. Precious metals are known as a hedge against inflation, and it would be hard to doubt that America is in the middle of an inflation right now. Give the Reagan Gold Group (RGG) a call while to discuss your current situation and what you can do to secure your assets for the future. Now may be the best time to take action, as no one has a crystal ball to predict the state of the country in 2023.