2022 has been a trying year financially speaking. The world is still reeling from the disastrous effects of the ongoing pandemic, the emergence of military conflict in Europe as well as heightened tensions among countries across the globe has made for an unstable economy.
The continuing energy crisis that affects the whole world, has made the prospects even bleaker, as the oil, gas and electricity markets have taken considerable hits. Rising energy prices are in turn pushing agricultural costs, which, by extension, contributes to the increase of food prices worldwide.
All these events have precipitated a period of rising inflation. Soaring natural gas prices are believed by experts to be at the root of a potential energy rationing in the upcoming winter. This prospect seems increasingly more likely, and it has caused unrest among people, as well as delayed progress made by countries pledging to reduce carbon emissions in the next few years.
With all this in mind, it’s easy to see why everyone would be concerned about their comfort and financial safety. If you’re an investor, you’re probably all the more preoccupied, because trades are an integral part of your livelihood. And with 2023 right around the corner, here are some of the things you can expect and should look out for in the upcoming year.
Stocks in 2023
Investing is an activity that carries with it a certain degree of risk. Variations in the market can and do change places, and so investors must always proceed with caution. However, when you gain insights into how the markets work and what direction they generally go in, it becomes easier to anticipate the changes and prepare for them. Stock shorting is most common when it is time for companies to submit their quarterly report–If you want to learn more about this, see how stock shorting works.
This year, however, has been somehow different. The increased volatility can easily and correctly be attributed to the many conflicts around the world, but knowing the cause does nothing to assuage the effects.
These complicated situations may change in 2023, in which case global inflation will decrease and people will not feel the effects of growing prices as acutely. It is also good news if you’re a trader, as it means your portfolio will recover from a slump.
However, this isn’t guaranteed. It is still unknown when inflation levels will begin to taper off, or if they will do it at all in the following year. Escalating prices may stagnate, but a concrete reduction cannot be estimated with 100% accuracy.
Since there’s always a chance that inflation may take a longer rather than a shorter time to cool off, you want to be prepared for possible stock market plunges and even a hypothetical recession. Focus on companies that are low in debts, have solid balance sheets and optimal cash flow and place your investments there.
The bear is here to stay
You’re probably familiar with the bull and bear market models. The former is on the rise, and usually happens when economic conditions are favorable, while the latter is the complete opposite and signals a receding tendency, as well as declining stock values.
2022 has so far been a decidedly bearish market, with experts claiming it was one of the most unfavorable years to be an investor since 1970. The general consensus is that the market is not going to bounce back anytime soon, so while it’s important to keep an optimistic outlook, it’s also important to not let rose-tinted glasses distort a realistic view.
During periods of stock recession, you must avoid the urge to sell. If you see your portfolio beginning to lose value, it’s normal you’ll feel the need to gain a sense of control over your assets by selling. But it’s good to rein yourself in and think this decision through.
The truth is selling can seem like a clever decision, but it only yields results in the short term. When you’re looking for the long-term, you’ll want to hold on to what you have and branch out towards other markets that offer store of value. You can trade in precious metals, learn how to buy crypto, or invest in financial capital.
When you sell in a bear market, it’s very unlikely you’ll be able to get back in when the plummeting shifts its trajectory. After all, it is the complete opposite of trading’s golden rule “buy low, sell high”. The only notable exception is if you have money invested that you estimate you’re going to need shortly, but other than that, the best course of action is to wait it out and stick it out.
FinTech Seems To Stay Top Of The Agenda
Even in a bear market, fintech seems to be going strong. Venture capital might be drawing up ever so slightly and smaller start-ups feeling the pinch, but in general the fintech category remains buoyant and strong. Many investors seem to be poised for a return to a bull market and are still keen to invest in fintech through different mediums. This might be on the general open market stock exchange, or through private stocks.
Fintech (financial technology) is attractive because over the last decade there have been major strides and huge wins for investors from pumping funds into fintech stock investments (private and public). The same investors will be hoping for a similar return when the bear comes to a close and the bull goes into full tilt. It might not be in the first part of 2023, but as the year goes on Fintech will gradually attract higher levels of investment.
We’ve already established that this year has seen many upheavals and, along with them, the prices and value of many products and assets have risen. The retail sector has been hardly hit as well, so if you own stocks there, you should tread carefully.
There’s been increasing discussion surrounding consumer cutbacks, excess inventories and, of course, steep costs. This situation, across all business sectors, has left investors dealing with a higher degree of uncertainty than usual. When US stocks rallied during the summer, many traders hoped the market bottomed, but experts warned that further volatility will ensue. The present is all the proof you need to see that they were right.
This phenomenon was nothing more than a typical bear market rally, which sees equities rise significantly, but only for a short period, before continuing their decline. It’s not an uncommon situation and many a new investor has likely become entrapped in it. However, once you become aware of the intricacies of a bear market, it becomes easier to recognize and avoid the risks.
While the full picture of 2023 will only materialize when the year rolls in, the predictions offer a clear indication of the outcome that’s most likely. The truth is that experts estimate the future to be quite uncertain and rather bleak, but this doesn’t mean you should pull out of all your ventures and call it quits for good.
Stocks remain an attractive investment. Be careful of the negative signs so that you can avoid unfortunate outlooks, but rest assured that your career as a trader is far from over.