2023: Looking Up Like the 2009 Disney Movie

There is no shortage of things to worry about as we start 2023. The Federal Reserve is (rightly so, in our view) concerned about inflation becoming entrenched, and will therefore likely continue to raise interest rates for most of 2023. Putin seems unlikely to concede defeat in Ukraine, and his desperation could lead to escalation, potentially even of the nuclear variety. California seems to be washed away while remaining in a drought.

China has loosened the zero-Covid policies that helped the country continue to function during the first phase of the pandemic while much of the rest of the world shut down. Unfortunately, the policy was remarkably successful in preventing people from catching the virus, meaning the population has little natural immunity to the now more infectious strains of the virus circulating today. Combined with a weak vaccination policy, Chinese infection rates, hospitalizations and deaths from the virus are skyrocketing. This is both a human tragedy, but also a source of considerable uncertainty about the country’s ability to continue filling supply chains worldwide.

In short, expectations for the world economy in 2023 appear to lie somewhere in between A Clockwork Orange [1971] and The Exorcist [1973 and 2023] on the Hollywood scale of financial prospects.

When it comes to stock market investing, investors’ mood swings tend to overshoot. If we think other investors are tuning in for horror movie marathons, it’s often a good move to surf on to the Disney Channel for a little hope in the face of adversity. At Fonden Grønne Indkomstfond, our mood is less The Texas Chainsaw Massacre [1974] and more Up [2009].

There will undoubtedly be moments when things don’t look good for our animated stock market heroes in 2023, but we feel bullish about the outlook for the clean energy income stocks that are at the core of our portfolio. Horror moviegoers have knocked valuations back from the romantic comedy highs we saw in late 2021, and new policies like the Inflation Reduction Act and Europe’s push to divest from Russian fossil fuels both greatly increase the chances of an upbeat ending despite the challenges. The Russians are likely to inspire clean energy stock market advances. Call it one October sky [1999] theme for 2023.

The stock market is never without risk, so investors should not focus on avoiding risk, but on looking for the times and places where the potential downside is already reflected in prices, but the potential upside is not. These times come and go in both the market as a whole and sectors.

Since I started writing for AltEnergyStocks.com in 2007, I have only been more bullish than I am now three times. At the beginning of 2016. A group of clean energy infrastructure stocks called Yieldcos had gone through a bubble that burst in mid-2015. The same Yieldcos traded at large valuations and I bought lots of tickets for the feel-good movieleading to a good few years for my “10 Clean Energy Stocks” model portfolios i 2016 and 2017.

Similar good movie and investment opportunities for the entire market were released in 2020 at the height of the pandemic and in late 2008 during the implosion of the housing bubble. Both of these are good examples of the theme when playing horror movies (perhaps Pandemic and Evil hotel, respectively) brave souls who buy during the most dire periods often end up doing well. I was less bullish than I should have been about the market’s outlook in 2020, so I didn’t go all-in; I cautiously bought a few tickets then. At the end of 2008 I wanted to buy, but I had been less prepared for a downturn at the beginning of that year than I should have been, so why I wanted to buy, I didn’t have the money to invest that I should have. 2008 was an important learning experience for me and a big part of the reason the early 2020 crash didn’t catch me.

This year the previews have definitely got me interested again. I’m not as confident that green income stocks are poised for the blockbuster year as I was in 2016 or late 2008/early 2009, but I’m more confident than I was at the low point of it pandemic bear market in 2020.

2023 is an investment movie I am excited to see. I buy a lot of tickets.

DISCLAIMER: No positions in the films mentioned in this article. I haven’t even seen them all… horror movies are not my thing.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future performance. This article contains the author’s current opinions and such opinions are subject to change without notice. This article has been distributed for informational purposes only. Forecasts, estimates and certain information contained herein should not be considered investment advice or a recommendation of a particular security, strategy or investment product. The information contained herein has been obtained from sources believed to be reliable but not guaranteed.

William

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