The following post is courtesy of Diane Harrison who is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 specializing in alternative assets.
No one needs reminding how 2022 was a rough year for investors and managers, but as we open the second half of 2023, there are lingering issues impacting the health of the overall financial landscape.
Forbes recently posted an online article, Top 9 Investing Trends for 2023, which provides a quick snapshot of these areas. Here are the trend predictions and suggestions for how to think about their impact.
- Inflation will be with us through 2023
Inflation has a wide ripple effect on virtually all decisions impacting short and long term investments, so taking the time to inventory how your current investments sit is even more important than during the long boom markets we have gotten used to enjoying. The consensus for 2023 is that the Fed will keep a close eye on interest rates and inch them higher if needed.
- With a bear market sticking around this year, investors need to look at alternative investments as a hedge against their traditional holdings
While professional investors and institutions have long been proponents of holding alternatives in their portfolios, individual investors have been less likely to embrace them in a meaningful way. The era of rising stock markets, steady bond holdings, and other positive traditional stances ground to a halt in 2022, and isn’t coming back anytime soon. Incorporating alternatives into your portfolio is a smart way to develop a hedging mechanism against the threats facing traditional returns in 2023.
- Alternatives are priced for and accessible to all levels of investors, so getting educated about options should be on every investor’s to do list in 2023
Time was that alternatives were basically for the institutional or the very rich. But with wider acceptance and the development of a variety of structures that allow retail markets to offer alternative strategies to every level of investor, there is little reason for one not to gain a stronger understanding of how these investments can provide risk modification, diversification, and returns.
- Savings bonds are more attractive than ever in this year of interest rate uncertainty
According to a recent posting on Slickdeal.com, bonds are an attractive holding in 2023, in particular, Series I bonds, which earn interest for up to 30 years. The article states: The interest rate for Series I Bonds is unimpressive in some economic environments. But during the high inflation period of 2022-23, however, these bonds are extremely attractive. Bonds issued in the six months leading up to October 2022 paid an impressive 9.62% interest rate. That’s almost as good as the average return from the stock market but with far less risk.
- Layoffs across the job markets – tech to real estate, middle management to manufacturing- is likely to increase in 2023, causing concern over the strength of the US economy
As Harry Truman once said, ‘It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.’ The signs of rising cutbacks in 2023 are worrying.
In December, ResumeBuilder.com surveyed 1,000 business leaders to understand how employment in their organizations has fared in 2022 and the outlook for 2023. A few key findings:
- 6 out of 10 companies will likely lay off employees in 2023.
- 70% of companies are likely to implement a hiring freeze in 2023
- 79% of business leaders say they’re likely to fire ‘quiet quitters’
- Crypto currencies will still be struggling to recover from the debacle of FTX’s implosion as well as numerous other valuation concerns throughout the crypto chain, but there’s some hope
As if these currencies didn’t already have an uphill battle to gain wider acceptance, the numerous and catastrophic events of 2022 sent the market in crypto to lows that are likely to be the bottom for 2023. In other words, it’s more likely those markets will rise versus fall further, as most of the news woes and nervous holders have been flushed out of the currencies. And with regulation still in the future for the vast majority of these markets, there’s little constraint to hold back their rise.
- Renewable energy projects will continue to attract both federal funding and investor interest as the Green train keeps chugging along
With the strong interest and popularity of all projects Green, federal funding is widely available to those industries that are looking to gain a foothold in this trend. According to the Renewable Energy Report (6/2023): ‘…unprecedented growth is being driven by expanding policy support, growing energy security concerns and improving competitiveness against fossil fuel alternatives. These factors are outweighing rising interest rates, higher investment costs and persistent supply chain challenges.’
- Investors will likely renew their interest in robo-advisor services, which utilize algorithms to augment traditional financial advice, in an effort to combat the inflation-eroding impact to their portfolios
Robo-advisors are likely to grow in popularity in 2023 for the retail segment of the market, as these programs provide smaller investors with investing tools beyond their own abilities. Institutional and the affluent investor segments have complex portfolio needs and structures that are better suited to management by financial professionals who can fine tune the portfolio according to specific needs.
- Schwab is taking over TD Ameritrade and will become one synthesized platform over 2023
Another example of the large getting larger, this stage of the 3-year merger is slated to happen in Sept 2023, bringing the final combination of the two businesses under one operational platform. While both firms have enjoyed strong client satisfaction results, this final step to bring all accounts under the Schwab roof will be a test of just how well such a massive integration can be handled.
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