Ending 2022 on a good note

There’s a lot of good news for investors, if you manage to look clearly. We’ve come out of the pandemic in a heightened state of fear. Many of us are constantly looking over our shoulder for the next bad news story to emerge. This is understandable and totally normal, the pandemic was a life changing period for many of us.

It is during our darkest moments that we must focus to see the light. -Aristotle

I’ve written about when and how to panic as an investor previously (If you must panic, panic early) There’s an art to it. Most are only now starting to worry about inflation, when the time to panic was when rates were at zero and inflation was non-existent.

While it’s good to be paranoid as an investor, and always look out for fear, the problem with this approach is you can miss the good news right in front of you. There’s a lot of good news going into 2023 — the jobs market across developed economies is extremely strong, central banks are on the ball when it comes to inflation and China is starting to open up from its lockdown phase.

The world’s largest economies are in the early days of a major recovery. We have some amazing technology emerging. The AI revolution, combined with the shift to cleaner energy, could completely transform our day-to-day lives and improve economic productivity. Innovative is accelerating.

We can often get caught up in an echo chamber of bad news, and I think that’s the biggest risk for investors going into 2023. If you must panic, panic early. Panic about the good news. Interest rates are rising because the economy is strong. Rate rises will soften the economy, jobs are starting to be lost. But we’re coming off a very strong base.

I’m not blind to the risks, I’m just equally open to the opportunities.

The 2022 bottom line

Inflation will take time to come down, but it will eventually come down. No pain, no gain. That doesn’t mean we’re going back to zero rates. Never say never, but at the same time, very unlikely.

Next year will also be dominated by a slowing West and rising East. The goal posts will shift.

I’m a big believer in the Chinese economy, the determination of its people and the super-cycle that is the emergence of the east (China, India & neighbours) as billions of people look to improve their standard of life. I think 2023 is a resumption of this trend, which did suffer a setback during the pandemic.

China, energy, gold, and food are the investment areas of focus. Disruption is a given. That’s where the smart money will go.

The impact of zero interest rates and unbelievable pandemic stimulus — monetary and fiscal — will continue to play out. There’s no such thing as a free lunch.

Gold is one of the commodities where the current price just doesn’t make sense. We all know it should be higher, but it isn’t. That comes down to patience. It took 15 years of disappointment from 1986 to 2001 before a 6x rally.

Investment thematics take time. Investing is a marathon, not a sprint.

“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it”—Albert Einstein.

I wish you all a Merry Christmas, Happy New Year and a safe holiday period with your loved ones. Take care, relax, reset and get ready for a big year full of opportunity and hope.

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