Investors are optimistic despite the market decline of 2022. many see a relatively attractive climate It is important that investors think for the long-term and not get caught up in the moment. There are many pockets within the market It could be profitable, despite the economic downturn, and it could attract investors instead of short-term traders. for Years to come.

However, if the Fed doesn’t stop raising interest rates it might be even more. what drove 2022’s market.

“This year saw growth stocks, tech stocks, and cryptocurrencies take a beating,” says Sawhney. Sawhney expects 2023. “progress on a similar path until recovery begins.”

It’s important to not let the financial media and short-term news distract you from the long-term opportunities, says Josh Answers, host of the Trading Fraternity channel on YouTube. “Look at fundamentals and stick with what you know and have researched,” He said. “The news outlets are always late to the party, so do your homework and anticipate moves in the market.”

And with the economy weakening, it could be a good time to stay away from retail and leisure companies, which are sensitive to economic cycles, says Mina Tadrus, CEO of Tadrus Capital, a high-frequency-trading hedge fund. “The pandemic has already had a significant impact on these sectors, and a potential recession could further hurt their performance,” He said.

How could stocks outperform other stocks in 2023

These are just a few of the areas that investors might see potential opportunities over the next year.

Companies that are quality

“Maybe the market has further to fall and maybe it doesn’t, but the prolonged sale on quality assets is irresistible,” McBride.

The focus is here on high quality businesses, which may not just survive but thrive. recession But they can actually prosper by expanding their competitive advantage. As economic conditions get worse, companies that are weaker and more indebted may find it difficult to survive.

“Stay focused on long-term strategies that seek to capitalize on innovative and growing businesses that are aiding the digital transformation of all enterprises,” Gerry Frigon is president and chief financial officer at Taylor Frigon Capital Management.

Value stocks

A notable exception is the value stock market. It has performed exceptionally well in both rising rates and falling rates. market. “Investors are so used to growth stocks outperforming value, but 2022 provided a strong lesson on which stocks and sectors tend to thrive in a rising interest rate environment,” says Keller.

According to him, bond yields will continue rising from now on. Value stocks may continue outperforming.

“We don’t feel that the 10-year Treasury yield has seen its peak yet for the cycle, and that should lead to ongoing strength in value stocks over growth stocks,” says Keller. “Investors have not seen this sort of environment for decades.”

Tech stocks

Stocks of tech stocks were among the most affected by the financial crisis. marketEven bellwethers like Amazon are down over 50% from their all-time highs. It is the tech-heavy Nasdaq is down more than 30% From its 52-week peak, its most important components like Apple Microsoft has fallen far below its yearly high watermarks. However, such falls offer great opportunities for moving forward.

“Software is likely to fare well once the rate hikes have subsided and the long-anticipated ‘recession’ either happens or not,” Frigon. “One is hard-pressed to find a space that has better growth currently, or in the future than in that space.”

Keller agrees: “If and when a market bottom emerges in the first half of 2023, we’d be looking to technology as a fantastic long-term opportunity, given the heavy drawdowns since late 2021.”

Tadrus thinks that tech stocks will do well by 2023. After being long-term winners over the past decade, he also believes they may be a good investment. Also, he believes that utilities and healthcare may do well because of their potential for growth. “tend to be relatively stable and are less vulnerable to economic downturns.”

Small-cap stocks

Investors often first notice small-cap stocks when they see them. recession. Your smaller size and lower financial wherewithal These stocks are riskier than larger-cap stocks. But it’s important to look at opportunities here carefully since small stocks have the potential to grow at higher rates and deliver better returns for investors.

“Most investors are letting the pessimism of the moment get in the way of recognizing excellent value that exists in many small to midsize companies,” Frigon.

A few small-caps can lead to large returns for Years to come.

How can investors make it through a potential rocky 2023 year?

Many investors see the first six or nine months of the year—and a concurrent recession—as a slow period that sets up investors for You will see better returns in later parts of the year.

“We feel that going into the fall, the stage will be set for a strong recovery from the 2022-2023 cyclical bear market,” says Keller.

However, even if stock recovery falls into 2024 a down market It takes less time. for Long-term investors will be able to invest at lower prices. “Most experienced investors find opportunities to build wealth for the long term during bear markets,” Raju.

Here’s How experts Say hello to navigate the market In 2023.

Long-term thinking is key

Investors must look past the doom and gloom of today and realize that today’s lower prices are likely to be seen as good bargains in just a few years.

“This is a great time to be investing as valuations have come down to more reasonable levels,” McBride.

The following are some of the highlights. market Investors who think three to five years ahead may find it difficult, even if the market is rocky for the immediate term. should be amply rewarded over time.

Be patient and slow

“The best way to invest in this type of market is with a small sum of money,” Josh Answers

Fortunes are made over time. Investors should be disciplined. This discipline can be as simple as adding more money to your portfolio. market Regularly using the process known as dollar-cost averagingThis will help you to reduce the chance of accidentally putting too many chips on the table.

“The stock market has been down 15%–20% for months on end, so for investors who are dollar-cost averaging, you’re continuing to effectively buy $1 bills for 80–85 cents,” McBride.

By investing regularly, you can avoid buying at too high a price but you also keep your focus on adding to your investments when they’re lower, setting up better returns for Years to come.

“Many people are scared right now due to the volatility, but that shouldn’t scare you if you are investing small and frequently,” Josh Answers “Slowly and frequently, one time a month, has kept us alive in this market.”

Stay invested

You can’t get the market’s long-term returns unless you remain invested, but that’s exactly what Stocks falling is when it’s the hardest thing to do. Nevertheless, it’s vital to stay invested.

“You want to remain fully invested and maintain your regular investments because at some point this market will begin to rebound and that tends to happen when the headlines are still pretty ugly,” McBride. “You want to be on the train, and not on the platform, when it pulls out of the station.”

You can help yourself stay invested by taking a passive investing approachThis will help you to get out of your emotions. Set up your account to buy stock or index funds on a regular basis and then don’t even look at the market.

“As a proponent of set-and-forget passive investing strategies, fears of bubbles and recessions do not cause alarm,” James Beckett (a financial coach, writer) for TinyHigh.com, a website that specializes in personal finance. “Market-timing simply is not part of the passive-investing philosophy.”

Coincidentally, that’s the same approach advocated by legendary investor Warren BuffettInvestors are advised to regularly contribute to an investor by. S&P 500 index fund.

End result

Numerous market Watchers expect 2023 will be turbulent and volatile. Regardless of whether 2023 proves to be easier or harder, investors still have proven investing strategies they can use to weather it. market. Even if 2023 proves to be another difficult year, for It is likely to create a stronger rebound for investors for You can get more investment at lower prices for the next year.