Stock Picking Competition And Predictions For 2023

After last year’s dismal picks, yielding -25.77%, I’ve decided not to bother doing the competition in future. While it’s just a bit of fun, it’s not very fun for me because it’s completely random. Why is it random? Well, December is not a time of year that I do research into stocks because the values are all skewed due to the Santa Rally effect. In addition to the lack of research (making my picks just guesses), the skewing affect of the Santa Rally makes picks a bit random anyway, because it’s impossible to know what effect market sentiment will have on stocks after the erratic rally.

Finally, picking stocks at a specific time of year means that it’s not possible to emulate the way I invest because there’s no way to pick the stocks as buying opportunities appear. Consequently, I don’t feel invested in my picks and so I find myself saying each year, my stock picks rarely represent my personal stock portfolio throughout the year.

Predictions For 2023

I will, however, take a punt at predicting how the year will go. This is something that I do constantly throughout the year, which is necessary for investing. While I update my ideas throughout the year, it’s worth having a guess at where things will go so I can plan out my investments throughout the year as time goes by. So here goes, a cursory punt at predicting what may pass in 2023:

  • The property market will continue to decline. I won’t predict how much because the official reports are not aligned with my own perceptions and measurements, so there’s no way to measure the success of such a prediction in an unbiased way. Also, I don’t have enough data to make an accurate prediction on this anyway.
    The fundamental reason for me to think that the property market will worsen is that I believe that inflation will persist, which will lead the RBNZ to continue to increase the OCR, which will increase mortgages and make it harder afford a house (therefore reducing demand)… Which brings me to my next predictions…
  • The OCR will increase to at least 5.5% by the end of the year. This will lead to fixed mortgage rates in excess of 7.5%.
  • Inflation will remain high, but headline inflation will be reported slightly lower. I have no way to work out how much and the concept of “headline inflation” is arbitrary anyway, but for fun, let’s have a guess and say that headline inflation will be 6.2%.
  • Given that the government is churning out policy at high rate, polls and popular opinion don’t seem to be in their favour, I imagine that the government will delay this year’s election as long as possible (unless something comes up that might lean towards their political favour). On that note, I suspect that the next government will be comprised of a National and ACT coalition. This has significant bearing for 2024, meaning that business will improve (in 2024) as immigration policies change improving employment options which will reduce business costs, RSA workers will be allowed in again so food prices will come down, many aspects of the local stock market will recover, etc… But let’s stick with the predictions for 2023 before we get into 2024… needless to say you can see which of the two year’s I’m most looking forward to.
  • Finally, implicitly, given the previous predictions, it should be obvious that I’m going to predict a bit of a recessionary environment throughout 2023, improving in 2024.
  • Jocularly, given how this year started for me, among my peers with whom we are also making predictions, I have also predicted that this year I will get a horrible disease!

Those are my predictions, let’s hope I’m wrong.

3 replies on “Stock Picking Competition And Predictions For 2023”

It looks like things are moving a bit faster than I thought, so I’m going to add the following to my list:

I’m a little more confident about calling a recession, which will therefore mean that wages and salaries start to come down. Particularly in the business centers of Wellington and Auckland because other area’s will be supported a little bit by industries that have been depressed over the past few years and are essential (i.e. agribusiness).

As a result of this, I expect discretionary retail to start to suffer in NZ.

The inflation beast will still not be conquered because monetary policy is not the way to fix a lack of supply. Trying to fix inflation with monetary policy will just make people poor because they’ll continue to have less things (current supply issues) but monetary policy will make those things feel more expensive and unobtainable.

It’s not going to be a good year, but 2024 will be 🙂

With regard to inflation, I expect food inflation to continue a lot this year. I say this because of all the bad weather which will damage crops. In addition to this, we have the same problems of last year, which is a government that hates business and wants to stop RSA workers, increased farming costs, etc.

Not so related to investing, but as an addendum, I will also say that I predict crime to continue to escalate throughout 2023.

I had thought that this might affect my inclination to invest in retail shops (I have a specific one in mind which is listed on the NZX as a future investment post 2023), however I’ve given it a little thought and (while I’d factor this into a valuation as an ongoing increasing cost) I have decided that the impact of crime is already factored into the Profit and Loss statement for my standard valuation methods and reasoning behind my investments.

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