2023: The Year of the Investor?

by Andrew Zatlin

The New Year is approaching fast.

It’s time to start thinking about how to position our portfolios.

Will 2023 be another rough year? Or are more profitable days ahead?

Let’s take a look…

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

2023: The Year of the Investor?

2022 has been a terrible year for most investors. Will 2023 be any better?

To answer that question, we need to understand something surprising:

We’re not done with Covid yet, at least not from an economic perspective.

You see, we’re still dealing with the effects of the economic whipsaw created by the Covid recession. And that’s creating a new set of stocks to buy, and a new set of stocks to avoid.

Let me explain.

A Recession Like No Other

Most recessions follow a similar pattern:

There’s a gradual drop in hiring and production, followed by a gradual re-stocking as things return to normal.

But the Covid recession was different. The drop was sharp and sudden: fifteen percent of America’s workforce got laid off in a few months. But the recovery was just as quick.

And there were some unique twists along the way…

Cash Rules Everything Around Us

For example, this recession featured lots of cash in consumers’ pockets, courtesy of the U.S. government.

To see what I mean, check out this chart. It shows how much Americans spend to service their debt, relative to their incomes.

When the government slashed interest rates, the cost of servicing debts went down. In fact, debt service went from ten percent of peoples’ incomes to around eight percent. That’s a huge amount of extra money in consumers’ pockets!

Furthermore, the government put money directly into peoples’ pockets in the form of stimulus checks. As you can see below, this caused personal compensation to surge:

Simply put, Americans had an infusion of cash. And they desperately wanted to spend it.

But they couldn’t...

Supply Shortages led to Inflation

Factory production plummeted during Covid. Ports and factories were limiting their workforces from showing up, or they closed their businesses down entirely. This was a recipe for disaster.

Supply shortages, decreased production, and extra cash in the system created rapid inflation. Meanwhile, average hourly wages skyrocketed. Take a look:

Typically, there’s an annual increase in hourly earnings of two or three percent. But during Covid, earnings jumped by about six percent.

This is what I mean when I say we’re still recovering from Covid. And this recovery will have a major impact on our investments in the year to come.

Here’s how…

A Return to Normal

If 2022 was all about inflation, 2023 will be largely focused on normalization.

That means less supply shortages, slower growth, and less inflation.

In fact, hiring is already slowing. Take a look:

Payroll figures have reached pre-Covid levels, meaning we can expect less growth moving forward.

So, what happens next?

What’s in Store for 2023

I’m keeping an eye on a handful of investment themes. For example:

  • What happens when supply shortages and excess money disappear? Could we experience deflation, where price increases don’t just slow down but go in reverse?
  • What’ll happen with Ukraine? Just this week, the country staged a massive counter-offensive against Russia. The war could come to an end next year. A period of reconstruction could be promising for the Euro.
  • Here in the U.S., I’m looking at bonds. A recession would likely bring an end to interest rate hikes, which would be good news for bonds.
  • I’ve also been doing research on which sectors benefited the most from all the inflation. Because today’s winners could be tomorrow’s losers. And vice versa.

These topics present significant opportunities to profit.

And today, for “Pro” subscribers, I’ve put together a powerful list of companies whose stock prices could soar in 2023.

Don’t miss out.

In the meantime, here’s to a happy and profitable 2023. Zatlin out.

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In it to win it,
Andrew Zatlin
Andrew Zatlin
Moneyball Economics