Outlook for 2023 through the eyes of experienced investors by Radovan Vávra and Štěpán Hájek

Wondering how experienced investors see 2023? Then definitely check out this article where Radovan Vávra and Štěpán Hájek give us their views. What stocks represent an opportunity for them this year?

I decided to do a series of articles on the topic - Predictions/outlook for 2023 through the eyes of experienced investors. In the first part, Radovan Vávra and Štěpán Hájek reveal their views.

First of all, I just have to mention that I am grateful to everyone for being open and for providing their opinions. Predictions are often tricky and few people can get it right. So please take it easy and have a good read! 😎

Radovan Vávra

The answers to the questions will emerge from the world view we have for the next year. This, of course, corresponds to our information as of today and will change over time. However, my basic scenario is this. The entire year 2023 will see restrictive central bank policies in all major economies except Japan and China. The war in Ukraine will continue in a similar fashion to the last quarter and there will be no peace deal. The world will not be hit by a new, worse mutation of the SARS-Cov-2 virus. Higher energy prices will persist, especially in Europe. Other commodity prices will fall. Supply chains will continue to recover. Inflation everywhere in the world will be significantly above central bank targets. The world economy, with the exception of China, will slow further, with some parts falling into stagflation. Of course, none of these trends will begin and end with 2023, but they will characterise it.

I would be interested to know your expectations for 2023. Will we finally see an improvement or will there be more pain and problems ahead?

2023 will be a year of waiting, i.e. there will be no dramatic global recovery. The crisis will be worst in Europe, where high energy prices, restrictive ECB policy and a drop in demand in export markets will add up. Inflation will be high, growth weak. Europe's economy will fall further behind the US and China. We are simply the Old Continent in every sense of the word. Europe's largest company by market capitalisation is... wait for it... LVMH. No car company, no IT, no AI... A handbag maker.

Where do you see opportunities in the market right now? Will any particular sector do better than the others in 2023?

Supplying arms to Ukraine means NATO has empty warehouses (in some commodities). Patriots and F35s can't be produced overnight, so the whole arms sector is BUY. NATO expansion and increased defense spending will only further encourage this. So LMT, RTX, NOC...

Can the dominance of energy stocks continue this year?

Energy stocks will suffer from the reduction in global economic growth, so for me no.

Will 2023 be a good entry point into US equities?

Sure!!!

Do you have your eye on any specific stocks for this year?

Microsoft, Google, Tesla... Each for a different reason, but BUY is each for me. The rationale would be for a separate essay. But for example, I don't see Apple and Amazon so clearly anymore...

How does Štěpán Hájek see 2023?

I would like to know your expectations from 2023. Will we finally see an improvement or will we still have some ''pain'' and problems ahead of us?

The year 2022 was about inflation and central banks fighting inflation, which has fed through into stock market performance. The year 2023 will be about the lagged effects of central bank policy tightening, which has historically proven to be quite a troublesome period. I don't have a strong opinion on whether there will be a recession and a dramatic fall in equity markets. However, the "best" conditions in several years are in place to do so. Corporate profits will be flat at best next year and margins will be under pressure. That's not very positive for stocks. So it looks more like trouble, but the depth of the trouble may cause inflation to fall rapidly and force the Fed to rethink its monetary policy. That would be a positive for equities.

Where do you see opportunities in the market at the moment? Will any particular sector do better than others in 2023? Could the dominance of energy stocks continue this year?

You need to be very selective in the stock market. An opportunity for a relatively safe investment is government bonds, which can also deliver a very interesting capital return. In 2023, the energy sector or healthcare may dominate again. However, I don't have a specific favourite and investors should look more for growth titles, which may come under even more pressure, where there may be interesting buying opportunities.

Will 2023 be a good entry point into US equities?

Any year is a good point to enter US equities. However, the economy is facing difficult challenges and further downturns should be expected.

Do you have your eye on any particular stocks? If so, why this/these?

I will be looking to buy companies in growth sectors that will underpin the next decades of growth in the global economy, namely data processing, cloud and semiconductors. I have my sights set on stocks like Nvidia $NVDA-3.3%, AMD $AMD-0.3%, Google $GOOGL+0.5%, ASML $ASML-1.0% and Veeva $VEEV-0.3%.

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Please note that this is not financial advice. Every investment must undergo a thorough analysis.