2023 Stock Market – Safe or Stay Away?

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A wise man once said, to know the future we must understand the past. While that anecdote may not solve all of the problems incurred while investing in the stock market, it will provide insight into where we are and where we may be headed.

So, let’s take a quick look at 2022. In 2022 we saw the stock market open the year with the S&P 500 at a new all time high. As the year wore on we watched it fall. Finishing 2022 at roughly 18% down from the start of the year was hard to say the least.

Some of big banks had predicted that we were going to move from 4,700+ to start 2022 and finish the year north of 5,300 – and they were wrong as we finished at 3,839.

Here’s what some of the big banks are saying will happen in the stock market in 2023:

Goldman Sachs has global growth at 1.8%.
JP Morgan has said they expect “A bad year for the economy, a better year for markets.” They also added that they believe the housing market will hold up as there is a lack of supply that will prop it up.
BlackRock said “The Great Moderation, the four-decade period of largely stable activity and inflation, is behind us. The new regime of greater macro and market volatility is playing out.” They add that equities have much further to fall and that we should get used to living with long term inflation above 2%.
Deutsche Bank expects that inflation will be tamed quickly and that CPI will come back down to earth at 4.1%. They expect equities to get off to a good start in 2023.

The point I am making here is that no one knows where the market is heading, and if the brightest minds at the biggest banks can’t even agree on it how is the average person supposed to invest.

My recommendation for 2023 is to hold as much as one can for now. The Federal Reserve is making massive, likely too large, strides to toward to curbing inflation.

Their use of Reverse Repurchase Agreements and raising the Federal Funds Target at the same time is sapping liquidity from the system. It is very likely that we are over correcting; however, if the Fed stays the course the one thing you can count on is inflation coming down. If they pivot or introduce liquidity back to the system inflation could be locked in. The safest play at the moment is like to hold your cash or get into hard assets like property – as there are some deals to be had.

Check back for more recommendations as time progresses.

*Please note this is for informational purposes only, we are simply expressing how we are handling our own funds. Consult with a licensed financial advisor before making decisions regarding your own money.