A massive stock market shift is happening in the stock market right now. If you recognize it today – and get on the right side of it – you could make fortunes in the stock market in 2023.
If you miss the shift, though, you could get crushed this year.
In short, it has to do with how everything is changing.
Specifically, when you look at the global economy and financial markets, everything that was happening in 2022 is no longer happening in 2023. In fact, quite the exact opposite is happening this year.
Markets are shifting 180 degrees in 2023.
The Major Macro Shifts
Let’s start with the basics of the economy.
- The rising inflation regime of 2022 has become a falling inflation regime in 2023. The headline inflation rate climbed all the way above 9% in 2022. It has since fallen to 6% in 2023. And now the futures market is pricing in a collapse to 2% to 3% inflation by the end of summer.
- The too-hot-for-its-own-good economy of early 2022 has become an almost too-cold-for-its-own-good economy in early 2023. The U.S. economy was growing at a 5%-plus clip heading into 2022. It has come into 2023 growing at a sub-1% clip.
- The huge stimulus of 2022 has become a massive absence of stimulus in 2023. Monthly money supply growth averaged north of 5% in 2022. Right now, money supply growth is running at -2.4%.
- The increasingly hawkish Fed of 2022 has become an increasingly dovish Fed of 2023. Throughout 2022, the Fed upshifted from no rate hikes, to 25-basis-point hikes, to 50-basis-point hikes, to 75-basis-point hikes. In 2023, the Fed has downshifted all the way back to 25-basis-point hikes, with talks of a pause and potential rate cuts in the future.
- Soaring oil, natural gas, and wheat prices of 2022 have become crashing oil, natural gas, and wheat prices in 2023. In early 2022, Bloomberg’s Commodity Price Index spiked more than 30%. In early 2023, that same commodity index has dropped almost 10%.
The Stock Market Regime Is Changing
All the major inputs of the global economy have shifted 180 degrees in 2023. As you would expect, the outputs have shifted 180 degrees, too.
Simply consider the following:
- The stock market crash of 2022 has turned into an impressive rally in 2023. The S&P 500 dropped 20% last year. It is up 4% in 2023.
- The energy stock boom of 2022 has turned into an energy stock crash in 2023. Energy stocks soared about 60% in 2022. They’re down more than 10% in early 2023.
- The tech stock crash of 2022 has turned into a big tech stock rebound in 2023. The Nasdaq dropped more than 30% last year. It’s up more than 13% this year.
- The growth stock collapse of 2022 has turned into a growth stock resurgence in 2023. Cathie Wood’s growth-centric ARK Innovation ETF (ARKK) dropped almost 70% last year. It is up more than 20% this year.
- The Treasury yield spike of 2022 has turned into a Treasury yield crash in 2023. The 10-year Treasury yield rose about 250 basis points last year. It is down about 50 basis points in 2023.
- The crypto crash of 2022 has turned into a new crypto boom cycle in 2023. Bitcoin (BTC-USD) crashed more than 60% in 2022. It is up about 70% in 2023.
From a financial markets perspective, everything that worked in 2022 is no longer working in 2023. And everything that didn’t work in 2022 is working really well in 2023.
The financial markets are majorly shifting.
Drive Gains by Looking Forward
This is an important shift to acknowledge because far too often, investors invest by looking in the rearview mirror. They predicate their investment decisions based on what has worked. They buy what has been going up and sell what has been going down.
Oftentimes, this investment strategy works.
But not when the market is undergoing a massive 180-degree shift like it is right now.
Investing by looking in the rearview mirror is a recipe for disaster during market shifts. It’s a sure-fire way to lose money.
Instead, you have to drive gains by looking forward.
You have to recognize the shifts happening in the market right now, and you have to take advantage of them.
The Final Word on the Stock Market Shift
With respect to today’s environment, we don’t really have an inflation problem anymore. That was a 2022 problem. In 2023, we have a recession problem.
Oil prices spiked after the Russian invasion of Ukraine but have actually been crashing ever since. Same with natural gas prices, wheat prices, and the price of pretty much every other major commodity.
Stocks aren’t crashing anymore. They crashed in the first half of 2022, went basically flat in the second half of 2022, and have been rallying here in 2023.
Tech and growth stocks are back in vogue. They got crushed in 2022 but are flying higher with vigor in 2023.
And, importantly, you have to recognize that market shifts this big are not short-term phenomena. They don’t play out in days, weeks, or even months. They play out in quarters and years.
Most investors won’t recognize these shifts. That’s why most investors won’t make great money this year.
But those who do recognize these shifts will give themselves the chance to make huge returns this year.
We recognized these shifts early. As a result, our Core Portfolio is up nearly 20% year-to-date, while the Dow Jones Industrial Average is down 3% this year.
Which boat do you want to be in – one rising 20% by capitalizing on the major shifts happening in the market right now, or the sinking boat that’s stuck in the past?
Obviously, the choice is yours. But if you’re interested in taking advantage of the rising tide, click here.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.