I predict that S&P500 index will hit 4200 in 2023 after a turbulent year that witnessed the Fed’s aggressive rate hikes to rein in a surging inflation and global supply chain disruptions triggered by demand spikes from economic re-opening post-COVID-19 lockdowns, and worsened by Russia’s invasion of Ukraine.
Technology sector, which had benefited tremendously at the onset of the COVID-19 pandemic, as corporations raced to accelerate the digitisations of their businesses and operations, and individuals rushed to acquire or upgrade their electronic devices for remote working and studying, faced the greatest headwinds this year as their valuations are particularly sensitive to interest rates.
With a looming recession, corporations from big techs the likes of Microsoft and Meta Platforms to global banks such as Citigroup and Morgan Stanley have announced layoffs and other cost-cutting measures.
As a result, the market has priced in an increasing odd of a recession next year.
A rally post mid-term election had not materialised, defying past records, while Santa Claus looks likely to come and leave without bringing the usual cheers to the market.
How the market will perform next year is going to be largely influenced by the Fed’s next moves next year. How fast the Fed hikes the rates is becoming less important than what is the ultimate level that the Fed will eventually ends its hikes and for how long will the restrictive monetary last.
While a recession next year appears to be inevitable, hopefully the economy will remain resilient and not plunge into a deep and long recession.
If history were to be any guide, the US economy will grow stronger after emerging from the macro headwinds.
Hence, I plan to stay invested. Furthermore, market statistics has shown that time in the market will generate greater returns over time compared with timing the market.
Merry Christmas to all and may the festive season brings joy to you and your families!
@CaptainTiger @MillionaireTiger @TigerWire @TigerStars @TigerEvents
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