Happy New Year! Whereas 2022 started with an overvalued market, 2023 seems to be just the opposite. This is a departure from the previous two Januarys, when GameStop’s January 2021 gains exemplified retail investors’ experiments, and Digital World Acquistion Company’s (DWAC) 2022 surge demonstrated retail investors’ gullibility. This year, investors seem guardedly optimistic.
With the events of COVID, the war in Ukraine and even Brexit (as this Bloomberg article points out), supply chain disruptions have given the world a hard look at the connectedness of our societies. Globalization has accelerated since the formation of the WTO in 1995, giving the world access to cheap goods and services. There are even arguments that the decade of low inflation can be attributed to access to cheap labor and goods that moved across borders with relative ease. In contrast, what we see now is more insular policies that promote domestic production, including recently passed laws in the U.S. on climate change and chip manufacturing.
On the positive side, if you look at developments in AI and robotics, I would say we may again achieve low-cost manufacturing. AI and robotics should help boost domestic production and lower the cost of labor. Repetitive, assembly-line tasks and jobs that collate references from many sources can all be handled much more efficiently with these modern tools.
“Those who know who and what they are do not need to ask what they should do. And those who must ask will not be able to stop asking until they begin to look inside themselves. It is everyone's task to show by example what questions one can ask of oneself, and to show that one can live with the few answers there are.” ― Joseph Weizenbaum, Computer Power and Human Reason: From Judgment to Calculation
In fact, I tried using ChatGPT, a chatbot recently launched by OpenAI, to help find opportunities for investments for 2023, and here are the results:
Question: What are the investment opportunities for 2023?
"It's difficult to predict exactly what investment opportunities will present themselves in 2023, as the global economy and market conditions can change rapidly and unexpectedly. However, here are a few areas that may present opportunities for investment in the coming year:
Technology: The technology sector has been a major driver of growth in recent years, and many experts believe that this trend will continue in 2023. Companies involved in areas such as artificial intelligence, cloud computing, and Internet of Things may present attractive investment opportunities.
Renewable energy: As concerns about climate change continue to grow, investment in renewable energy sources, such as solar and wind power, is likely to increase.
Health care: The health care sector, particularly biotechnology and pharmaceuticals, may continue to be an attractive area for investment as the world population ages and demand for health care services increases.
Emerging markets: Some investors may look to take advantage of the potential growth in emerging markets such as China, India and Brazil, which are projected to have some of the highest GDP growth rates in the world.
Infrastructure: With the world economy recovering from the pandemic, there could be a potential for investing in infrastructure, including transportation, construction and real estate.
Cryptocurrency: Digital currencies such as Bitcoin and Ethereum have been gaining mainstream acceptance, and some investors may see opportunities in this emerging market.
It's important to keep in mind that investing in any particular sector or asset class comes with its own set of risks, and it's always wise to do your own research and consult with a financial adviser before making any investment decisions. "
I would say the first four points are definitely accurate — and even number five, considering the travel and reopening activities.
I have compiled a watchlist of investment opportunities, called G20: 20 companies to invest in that were listed in my previous newsletters, as well as some bond options to build your portfolio.
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