The online retailer’s founder will come back to deal with its woes, said Michael Batnick of Ritholtz Wealth Management.
Plenty of financial-market professionals have spit out predictions for 2023 in the last few weeks.
These forecasts are often wrong, as when the consensus view called for an increase in stock prices during 2022. Instead, the S&P 500 fell 19%.
Michael Batnick, a managing partner at esteemed Ritholtz Wealth Management, acknowledges that annual predicting is futile.
“Market predictions are silly. We all learned this a long time ago,” he wrote in a commentary. “But that doesn’t mean they’re completely worthless.”
And why is that?
“Even though forecasts are almost always wrong, they can be entertaining and educational,” Batnick said. “That’s all I’m trying to do with this post. Entertain and educate.”
None of this constitutes investment advice, he said. “I’m not doing anything with my portfolio based on these predictions, and neither should you.”
Here are the forecasts.
· Tech continues its layoffs.
· International Stocks Outperform.
· The IPO market remains frozen.
· Value Outperforms Growth Again.
· Gold makes a new all-time high.
· Energy stocks continue to outperform.
· Bitcoin gains 100%.
Bonds Hold Their Own as a Diversifying Asset
“Bonds have historically done well when stocks got dinged,” though last year was an exception, Batnick said.
“The 10-year treasury yield went from an all-time low in 2020 to the highest levels in over a decade in fairly short order,” he explained. “That was painful, but the good news is we got it over with. You can’t go from [a yield of] 50 basis points to 4% again this year.”
So the good news is “if stocks have another rocky year, bonds should do ok,” Batnick said. “Even if interest rates were to rise, lowering [bond] prices, at least we’ve got the fixed income component to cushion the blow.”
“It would be easy to suggest that a massive decline in home prices is underway,” given the huge price jump from 2020 through the middle of 2022, Batnick said.
“But I don’t see that happening. The supply-demand imbalance is structural, with buyers outnumbering sellers by a lot. “
Further, “you see activity picking back up as interest rates have [dipped] over the past couple of weeks,” he said.
“As long as [mortgage] rates don’t shoot back up to 7%, home prices will cool, but they won’t crash.” The 30-year fixed mortgage rate averaged 6.42% in the week ended Dec. 29.
The Economy Avoids Recession, Stocks Gain Double Digits, and Bezos Returns
This year will resemble 2022 in that macro factors will dominate, Batnick said. “With peak inflation hopefully behind us, a consumer that is still in good shape, and an investor class that is negative across the board, it wouldn’t take much in the way of an upside surprise for stocks to take off.”
Amazon Get Free Report stock dropped 50% last year, it’s the largest annual decline since the dot-com bubble burst in 2000, Batnick said.
“Jeff Bezos spent 27 years at Amazon and has been gone for less than two,” he said. “In 2023 he pulls a Bob Iger and returns to steady the ship.”
Iger came back to Disney as chief executive in November, after retiring from the position in 2020.