If you’re wondering which are the best shares to buy in 2023, you’re not alone. We are living through interesting times, and there is a lot to consider when planning your future investment strategy. A combination of sky-high inflation and interest rate hikes around the globe made 2022 a very challenging year for investors.
So, will 2023 be any better? Potentially, yes, but there are a few things to consider if you are planning your investment strategy for the coming year. As wise investors know, there are never any guarantees.
Most experts would agree that, with a recession on the cards in the coming year, now is a good time to hold some defensive stocks. A defensive stock, also sometimes referred to as a non-cyclical stock, is one that tends to stay relatively stable regardless of fluctuations in the economy. Typical sectors that would include defensive stocks include the pharmaceutical, utilities, defense, and certain agriculture sectors. However, some investors would also consider the safer technology companies, such as Apple, as defensive stocks, despite not being quite as resistant to economic factors.
Although a recession is on its way, there are other factors impacting the economy that are also worth considering. Interest rates are currently high but expected to begin to fall again, at least somewhat, in 2023. Inflation may be currently sitting at a 40-year high, but it is also anticipated to ease a little in the coming year. As such, the best stocks to buy in the next 12 months are likely to include recovery stocks as well. A recovery stock is essentially a stock that has fallen in price but is thought to have the potential of climbing back to its original level. They are the typical ‘buy low’ opportunity, where you have at least some confidence that you will later be able to sell high.
The exact shares that you decide to invest in will depend on a wide range of factors, including your investment aims, your current portfolio, and your appetite for risk. However, some of the latest tips on shares being offered by market commentators include considering stocks in a wide range of sectors, from mining to banking to real estate, while maintaining, as suggested above, a good mix of defensive and recovery stocks. This should give you the chance to create a portfolio with some built-in safety that can continue to grow, as and when the economy slowly starts to recover.
While it’s good to keep an eye on recovery stocks, it is also sensible to avoid being overly optimistic. Fortune has reported that investment banks’ average price target for the S&P 500 next year is roughly 4,000, implying stocks will rise just 4%. When you take into account predictions from a wider, and less conservative, selection of Wall Street economists and analysts, that figure rises somewhat. However, with so much instability still throughout the global markets, a sudden and dramatic recovery is not something most investors will be banking on.
I hope this guide inspires you to take a look at some of the share options on offer for 2023 so that you can reach your financial goals.