We spend a lot of time and effort each year preparing our market forecasts. In this article, we try to summarize the top 5 investment tips for investors based on our previously published forecasts for 2023. This means that we don’t look at individual markets, but think from the investor’s perspective. What investment tips can help determine the do’s and don’ts in 2023, which markets are looking good, which types of investments should and shouldn’t be considered? Note that this article is based on the forecast that will be given no Stock market crash in 2023.
The tips in this article are based on the following predictions that we recently published:
Why the markets should resume their uptrend no later than March 2023
Stagflation Investing: How and Where to Invest in 2023
Lithium Prediction: Lithium stocks will be heavily bullish in 2023
What is the biggest investment opportunity of this decade? (published 18 months ago)
How to play the Green Battery Super Cycle in 2023?
A silver price prediction for 2023
Investment tip #1. Quality stocks over momentum stocks
Investment tip: Investors should initially focus on quality stocks that generate income and continue to grow. Over time, a greater focus on momentum stocks is allowed.
2023 is likely to come with rising inflation expectations.
We have used the TIP ETF as a recurring theme, the red line, in our 2023 forecasts. It is a measure of expected inflation, which has fallen aggressively in 2022. This is due to the very aggressive stance of the US Federal Reserve and other monetary policymakers around the world. However, we believe the TIP ETF’s decline has run its course. As seen on the chart, the fall in 2022 touched a rising trend line that has been in place for 18 years.
What this really means is that monetary policy should soften in 2023. Inflation expectations can rise again, presumably moderately (at a smoother pace, closer to the desired inflation rate of 2%).
Typically, stocks tend to react cyclically to the TIP ETF’s rise: top-quality stocks rise, at the end of the TIP ETF’s uptrend (top of the long-term channel), momentum stocks react to the upside.
For this reason, momentum stocks (a) should only be considered towards the end of 2023 (b) some of them, run-down quality momentum stocks, can be bought at discounted prices in this early phase.
Investment tip #2. The EV boom continues
Investment Tip: EV sales continue to boom, downed EV stocks that are delivering on their supply and production promises can be bought.
The EV boom is real.
However, not all EV stocks are worth your portfolio.
We have repeatedly said that we should only consider EV stocks that have a long and visible (proven) production backlog with pre-orders paid and production schedules confirmed.
This seems like an obvious list of criteria, it certainly is an obvious list, but the number of EV companies that meet all criteria is limited.
In addition, lithium and graphite are the key raw materials for the EV field. The best lithium and graphite stocks are must-haves in any long-term portfolio.
Investment tip no. 3. Watchrate and USD-sensitive stocks
Investment tip: The USD will fall in 2023, and so will yields. Stocks that are interest rate and USD sensitive should be considered early in 2023.
Moving on to tip #1, which was about rotating from quality (early in the year) to momentum (end of the year), we believe USD and interest rate sensitive stocks can be considered.
It’s really easy to find the USD and interest rate sensitive sectors: just look at which sectors outperformed last week as the USD and interest rates fell sharply.
These sectors will do well in the first half of 2023 as it is now clear that both the USD and rates are at the forefront.
Investment Tip #4. Volatility readings will gradually decrease
Investment Tip: We believe better times are ahead. VIX sets lower highs on its weekly chart. It might finally drop below its 200 WMA, which would be great news. 2023 will be really different.
Volatility remained high in 2022, however we expect average volatility to be lower in 2023. This really means that investors can buy the decline by respecting the other investment tips contained in this article.
Investment tip #5. Watch for silver’s secular breakout
Investment Tip: Silver prices are moving towards our first target which is $28. Once it is able to clear the secular resistance at $28, we see a quick move to $34.70 or even $41 in 2023 or 2024.
Silver is the outlier in 2023.
It is the market with explosive potential.
However, we must be patient and see the bullish confirmation appear on the silver chart. This could take many more months, ultimately we expect an explosive move in silver somewhere in 2023.
This is what we wrote in our silver forecast:
As seen on the longest time frame, the 50 year silver price chart, a giant cup and handle are in the making. This is a strong bullish pattern that could take another two years to really explode.
We continued:
- The leading indicators euro and inflation expectations turned bearish in Q2/2022 and pushed silver down.
- The silver CoT turned extreme, historically bullish as we headed into 2023.
- Once the euro and inflation expectations start to move higher, we will see silver take off.
Because of this, we see silver modestly up to $28 in 2023 and our first and longstanding bullish target of $34.70. Our 2023 silver price prediction is $34.70. Whatever happens at this price point will inform us of silver’s intention to attack ATH, probably towards the end of 2023 or 2024.
Silver is the outlier, the bonus, the wild card in the game. When silver takes off, it will be Halleluj time. Investors shouldn’t wait for this to happen, but rather start accumulating silver investments over time in order to be well-positioned once the silver market starts to boom. It’s a matter of time, but don’t wait. Better let it happen
Our must-read predictions for 2023. We encourage you to read the following predictions as they are very informative and very well researched:
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