How Did the Billionaires Do in 2022?
The Results are Shocking
If you think it was a bad year in the markets, you’re not alone. Many of the world’s top billionaires shed significant amounts of their wealth in 2022.
Here’s the current top-10:
Elon Musk -51%
Jeff Bezos -45%
Mark Zuckerberg -65%
Larry Page -37%
MacKenzie Scott -67%
Jensen Huang -51%
Changpeng Zhao -88%
Sam Bankman-Fried -100% ?
How Did Stocks Fare in 2022?
In case there was any doubt, almost every sector finished the year in the red. The greenest pockets were in energy, healthcare, and aerospace & defense. That’s almost entirely due to ongoing pandemic measures and geopolitical turbulence. Technology and travel got absolutely demolished.
This is clearly indicative of investor money flowing toward defensive stocks and sectors and flooding out of high-risk growth stocks amid global fiscal tightening.
Apple -27%
Amazon -49%
Alphabet -39%
Tesla -65%
META -65%
Netflix -51%
Nvidia -50%
Disney -43%
Carnival -60%
Expedia -52%
American Airlines -29%
What About the Indexes?
S&P500 Benchmark -19%
Nasdaq100 Tech -33%
Dow Jones Industrials -8.5%
Russell 2000 Small Caps -21.5%
SOX Semiconductors -36%
HGX Housing Index -23%
How Will Stocks Perform in 2023?
I expect the trends in energy, healthcare and defense to continue for at least the first half. As well, consumer staples and utilities may rebound nicely after a relatively flat year. Defensive sectors are likely the place to be until at least mid-late 2023. Why is that the case? Well, it’s a base model from the playbook that the Federal Reserve has given us.
Consensus is now that the Fed will pause after Q1 and begin cutting rates possibly as soon as December 2023. For visual confirmation of this, take a look at the FedWatch Tool.
This means we’ll be facing the headwinds of expensive borrowing rates, high inflation, and a slowing labour market for most of 2023. I also suspect there will be many weak corporate revisions during the Q4 earnings season, which will paint a picture of lowered profit and balance sheet expectations for the coming year.
That’s going to be a tough environment for riskier stocks and assets like Bitcoin & crypto to perform well. This is simply my interpretation, however, and it’s always recommended to do your own diligence. And of course, I do my best to keep you up to speed on new developments.
There are particular sectors that thrive during certain periods throughout the year. We discussed this in last week’s issue about seasonality effects.
Technical Analysis Corner
BTC
As the year draws to a close, I’ll do something I rarely do, and that is check the monthly charts. For Bitcoin, it’s hard to imagine a scenario where it doesn’t at least test the zone between the 2019 high and the consolidation range of late-2020.
If you’re looking for a place to deploy, you want to be watching this area. However, it’s worth noting the CME gap below that at $9665. And there’s no saying it stops there.
It’s best to let price action inform decisions, unless you plan to just invest through dollar-cost-averaging. For example, with a 10k cash portfolio, one might decide to invest $1000 every time the price drops by $1k. The beautiful thing is that there are so many strategies and everyone should develop their own approach.
ETH
For Ethereum, there are high chances that better entries will arrive in a few months as long as it doesn’t close above $1700.
$1070 is important support, as it’s the June-July close/open as well as the November low. Break below that and we have an air gap to $670.
Bitcoin Dominance
After all the early warnings the past few weeks, Bitcoin dominance is indeed trying to break out. A weekly close above 42.09 will do the trick. Next stops are roughly 44, 47, 49 if we get the follow-through here. The implications are that most altcoins would underperform if Bitcoin moves up, and rapidly lose value if it drops down.
S&P500
Here’s the monthly chart for the Standard & Poor’s 500 US stock market index. It tracks 500 of the largest companies listed on stock exchanges in the United States, and is commonly known as the benchmark.
The SPX doesn’t look bad here. After retracing 50% of the move up off the March 2020 panic bottom, it is looking to set a monthly higher low. The best way to scout a monthly HL is to scroll out to the weekly chart. In this case there’s a chance of a weekly higher low if 3765 can hold. Break below 3500 and bulls better watch out because the 70% retrace level could come into play at some point in 2023.
That’s all for today. Happy New Year!
Jay Charles
Editor in Chief, The Trading Tank.
See Also:
What’s the Best Time to Invest?
Crypto is NOT a Tax Safe Haven
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