2023 Predictions

Last Updated December 29, 2022
2023 Predictions
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Now For Some Fun..

This website is explicitly not in the business of making predictions. Part of the thesis underlying CMV is that no one knows what's going to happen in the future, that the stock market represents a weighted average of all future expectations, and that individuals cannot outperform said weighted average with any degree of regularity above chance. I.e., don't pick stocks, don't pay for actively managed funds, and generally don't have anything too exciting or risky in your portfolio.

But that's not any fun, is it? There's just something undeniably alluring about drawing a line and saying "here's what I think is going to happen". So once again with the caveat that this is not trading advice and has much more chance of being wrong that being right, here's what I think is going to happen in 2023.

Macro Items

  • Fed rates will increase. I don't think they'll go much higher, but they're not going down in 2023. My guess is we end the year with a target range of 4.75%.
  • Inflation will drop. Inflation peaked this year, and I think the ride down will be pretty fast. Predicting a year-ending YoY inflation rate below 4%.
  • The US economy will enter a recession. High rates will take their toll, and the Fed will not achieve their 'soft landing'. At some point in 2023 the US economy will be in a recession, though my guess is it will be a rather short one.
  • S&P500 will be volatile. This is the biggest guess at all, but I'll go on record that S&P500 will dip below $3,000 at some point in the year, but recover, and end the year above $3,500.

Broad Themes

  • Covid restrictions will return. The stories coming out of China look bad. I'm not sure to what extent covid will ever be "over", but it's looking more and more like it will flare up again in the West next year enough to cause more economic disruption.
  • EVs will dominate the auto industry. Hardly a prediction -- anyone who's driven anything with an electric drive train will tell you these cars are more fun to drive. As charging infrastructure grows (and as PHEV hybrid options become more available), these will simply take over.
  • Crypto falls further. The incredible collapse of FTX, matched the same week with Donald Trump's hilariously cringe NFT collection, have locked in that there was never a "there" there, and that crypto was always an enormous grift at worst, and a technology without a use case at best.
  • AI startups will dominate the news cycle. The advances in image and chat AI during Q4'22 has been incredible. The speed of improvement combined with the simplicity of use and availability of the tools will continue to disrupt. 2023 will see story after story of startups and established firms doing new and interesting things with AI, with real, tangible use cases and consumer products. Every single business, large and small, will begin thinking about how to use these tools.
  • Tech will recover. The large tech firms who dragged down the Nasdaq in 2022 are oversold, even heading into a recession. I'm not saying they'll go *up* in 2023 - but tech will outperform the rest of the S&P.

Speculative Fun

Again, to be clear, these are highly speculative guesses, not investment advice. At time of writing I do not hold positions in these securities.

  • Tesla will collapse. 2023 is the year Tesla becomes "just another car company", with a valuation/multiples to match the rest of the industry. Musk's misadventures with buying Twitter will haunt him, and as $TSLA falls he'll death spiral into margin calls and forced liquidation. Musk ends the year outside of the top 50 wealthiest in the world. SpaceX board names Shotwell as CEO.
  • Robinhood will fail. $HOOD will fall below $5 and be acquired, and eventually (though not in '23) be shut down.
  • Apple will prosper. $AAPL will remain the largest-cap company for the duration of the year, extending its lead over other big tech firms.

No matter what, it should be a very interesting 12 months.