Killarney

<h3>Investing is a game of probability, not certainty.</h3>
<p>Nothing is ever guaranteed. Unknown unknowns lurk around every corner, and the game is always changing.</p>
<p>However, while you will never be able to predict exactly what&rsquo;s going to happen in the future, current data does shine a light on what lies ahead for markets in 2023.</p>
<p>Here is my summarised view on the most probable direction for markets in 2023 and how to position your portfolio accordingly.</p>
<p>Inflation vs. recession</p>
<p>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.</p>
<h3>Stocks</h3>
<h3>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.</p>
<p>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.</p>
<p>More specifically, financials (Net Interest Margin improvement and balance sheet strength) and healthcare (ageing population demographics) are preferred from a sector standpoint.Bonds</h3>
<h3>The brutal repricing that came as a result of the Federal Reserve&rsquo;s efforts to tame the inflation beast have brought short term treasuries back to between 4% and 5%.<br />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.</p>
<p>I have increased my allocation to short-term Government bonds given the current interest rates on offer and uncertainties elsewhere.Real Estate</h3>
<h3>The ripple of weaker housing activity has already begun.<br />In the US existing home sales have dropped dramatically with November clocking the worst decline since February 2008 &#8211; down 28.4%.</p>
<p>This is hardly surprising given that we condensed 10-years of growth into an 18-month period as house prices jumped 40% since 2020.</p>
<p>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&rsquo;t build enough homes following the last housing crash to meet the demand coming from millennials reaching their household formation years.</p>
<p>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?</h3>
<p>It&rsquo;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.</p>
<p>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.</p>
<p>Now is the perfect time to set up your strategic long-term investment plan. Don&#8217;t wait until the market has moved to think about your investments.</p>
<p>For those looking for independent investment consulting advice, please don&rsquo;t hesitate to reach out.</p>
<p>Find my full list of 2023 predications on my website by scanning the QR code above.&nbsp;</p>


My predications for 2023

DOWNLOAD AND XPLORE