2022 was a year of market instability and ended up being the worst year since 2008. This has optimists stating it can only get better in 2023, and realists asking what can make 2023 a better year.
For the realists and the optimists alike, here are 4 investment trends to watch in 2023.
Gold is one of the most traditional investment options out there, especially during times of volatility. Investors flock to gold in times of turmoil because it is seen as a safe haven from the equity markets. Gold also has typically had a negative performance correlation with stocks; as a result, investors see it as an excellent way to provide diversification protection to their portfolio. Gold has traditionally maintained its value over time and is a stable long-term investment. Investors also use gold to help protect their portfolios from the effects of inflation.
Though gold did not perform as well as expected in 2022, it has a chance to rebound in 2023. Because the volatility of this past year is expected to continue throughout 2023 as many investors worry about a recession, gold could see renewed interest as an investment trend.
Similarly, renewable energy sources like solar, wind, and hydropower are growing investment trends to watch in 2023. As everything from fuel shortages, supply-chain disruptions, rising costs of fossil fuels, and a global climate crisis threaten the traditional ways we produce and consume energy, renewable energies will become essential in the future.
It’s estimated that climate change alone could reduce global economic output by as much as $23 trillion over the next 30 years. As the renewable energy sector continues to grow, this is a trend that investors can take advantage of through alternative-energy ETFs.
With continued rising interest rates and the persistent threat of inflation, there has been constant talk of a looming recession—so much so that according to an October 2022 Wall Street Journal survey, 63% of economists are now forecasting a recession and major job losses sometime in 2023, up from 49% in July.
This suggests that recession-resistant industries will experience renewed growth in 2023 as investors prepare for the possibility of a sustained economic downturn. Sectors like healthcare, utilities, and consumer staples are typically defensive and do not react as much (or at all) to recession-related volatility. This is because demand for these products and services remain relatively consistent despite economic turmoil.
The overall bond performance in 2022 has not been great. In fact, it could go on record as one of the worst years in history in both the size of the losses (over 16% down) and the range (nearly all bond funds of every type have declined). But the outlook for bonds is improving and the asset class could make a rebound in 2023. For the first time in decades, bond yields are close to what you would expect from stocks. This means there is a potential to make more money in bonds in the upcoming year.
The current market environment presents an interesting opportunity to buy bonds at significantly discounted prices. Despite the volatility, the outlook for bonds could be more optimistic in 2023. Bond yields and interest rates are up, while prices are down, making greater exposure to bonds an attractive option for many portfolios.
Partner With a Professional
Deciding what to invest in can be a difficult decision. At Premier Planning Group, we want to learn more about your personal situation, identify your dreams and goals, and understand your tolerance for risk to develop a strategy as unique as you are. If you are ready to start the conversation, call our office at (443) 837-2520 or email my executive assistant, Talia Grover, at firstname.lastname@example.org to set up a complimentary consultation.
Brion Harris is the CEO, founder, and managing partner of Premier Planning Group, an independent financial firm specializing in working with pre-retirees and retirees, helping them create customized wealth preservation and retirement distribution strategies. With over 20 years of experience, Brion has developed deep knowledge and skill in helping his clients simplify their finances and find confidence in their financial future. Brion and the Premier Planning team are known for their unparalleled client service and their dedication building long-lasting relationships with their clients. As a result, Brion has been the recipient of the #1 Advisor Leadership Award* at Summit for seven years running and has a reputation as one of the top retirement advisors in the business.
Brion is a proud 20-year resident of the Annapolis community, where he resides with his wife, Elizabeth, their three children, Addison, Jay, and Scarlett, and their two dogs, Pepper and Coco. When he’s not working, you can find him boating, skiing, traveling, and enjoying good food and music with his family. If you want to learn more about Brion, connect with him on LinkedIn.
The #1 Advisor and Leadership award is based on production data and is awarded by the Summit Financial Networks region of Cetera Advisor Networks LLC. Brion Harris received the award in 2019, 2020, and 2021. This award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client.
The #1 Advisor and Leadership award was based on production data while at Summit Brokerage Services, Inc. Brion Harris received the award in 2015, 2016, 2017, and 2018. This award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client.
The views stated in this piece are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities. Due to volatility within the markets, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Cetera does not offer direct investments in commodities (such as gold). The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value.
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