I’m not a financial advisor, nor am I offering financial advice to you. I’m just a dude sharing some end of 2022 thoughts on a website.
What lead to the fall of the market and why it could hit bottom in 2023
We’ve seen a significant decline in overall markets this past year with the NASDAQ down over 30% and expecting another 10% drop or more after fourth-quarter earnings for 2022 are released in mid-February.
While not as bad as the drops during the Dot-com bubble, this Fibonacci Retracement could present a great buying opportunity coming in late spring or summer 2023.
In 2020 when the Coronavirus began to impact the US, the government injected trillions into the economy due to many states adopting mandatory business closures and curfews creating a need for the mass printing of money in the forms of increased unemployment benefits, a stimulus for workers and businesses impacted by closures, and a general stimulus to all based on income level.
This contributed to bringing our national debt from the $18T in 2018 to $29T near the end of 2021, currently, now $31T at the end of 2022, when due to inflation the Federal Reserve began to raise rates, specifically Jerome Powel enacting a similar response to inflation as Paul Volcker in the 1980s.
Supply chain issues caused by extended closures, and work-from-home- policy changes drastically and quickly changed our economy and work practices. We saw huge increases in demand for connectivity tools such as Webex, digital payments platforms such as Square’s CashApp, and a significant rise in the “gig economy” with more workers taking on delivery jobs with companies like Uber and DoorDash.
With the return-to-office, we’ve seen the markets shift again, this time with a reversal of the areas we saw demand in, with the overall economy retreating 50-75% since November 2021 when the Federal Reserve began its combat of inflation and began quickly increasing interest rates.
Why the market could hit bottom in spring or summer of 2023
While fourth quarter 2022 reports won’t be available until mid-February of 2023, it’s expected that these numbers will continue to see drop. With layoffs in many sectors, especially technology, we’ll more than likely see drops in Consumer Consumption, which will also mean our GDP growth drops.
This could be an indicator that shortly after the end of February would be the bottom of the market and potential for buying opportunities once again.
There is also the likelihood that we will see a significant fall in the Real Estate market as new home buyers are priced out, investors hold off, and REITs produce less profit due to the rise of interest rates.
See last year’s thoughts on indicators for a market crash.
Short-term opportunities in the market for 2023
During the last year, many investors pulled out to hold cash positions while they wait.
As war broke out between Russia and Ukraine we saw oil prices rise and continue to rise now that we’re approaching one of the coldest winters facing the northern hemisphere in quite some time.
For those holding Exxon or Lockheed Martin in your portfolios you’re doing well. However, once winter is over and *IF* the war deescalates these could both retrace quickly.
Long-term opportunities in the market
In the last 30 years, we’ve seen tremendous advancement in the areas of personal computers, wearable devices, and green technology.
In the next 30 years, I expect we’ll see a similar advancement in the areas of Artificial Intelligence, Genome Sequencing, and Robotics.
Stock planning for when the market hits bottom in 2023
Keep the following list of activities as indicators for when you should buy or sell stocks:
- Federal Reserve interest rates
- The general state of the Economy
- GDP growth
- Tax and Retirement law and policy changes
- Hype – Be careful of FOMO
- Price Targets – Set a predetermined target for both opening and exiting positions
- Personal life changes
- Tax loss harvesting
- Job, relocation, or income changes
- Fundamental changes in the company or its purpose
- Key Management changes within the company
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