The Ultimate Guide to Investing in 2023

Investing wisely in 2023 requires a thorough understanding of the current market trends and opportunities. With the right investment choices, you can grow your portfolio and secure your financial future. 

Inflation was the economic glitter of 2022. The big question for 2023 is whether inflation will drop toward the Fed’s 2% target rate. Many experts suggest that’s unlikely. Morningstar predicts that the Fed will ease monetary policy and lower interest rates to roughly 3% by the end of 2023. Treasury Inflation Protected Securities (TIPS) and bonds should remain popular inflation-fighting investments​.

Exchange-Traded Funds (ETFs) 

According to Forbes, here are some of the top-performing ETFs:

Vanguard Dividend Appreciation ETF (VIG) 

With an expense ratio of 0.06%, a dividend yield of 2.0%, and a 5-year average annual return of 10.2%, this ETF offers high income to shareholders.

Vanguard High Dividend Yield ETF (VYM)

This ETF is more aggressive in its pursuit of yield with a dividend yield of 3.0%, and a 5-year average annual return of 8.1%.

Invesco S&P SmallCap Value with Momentum ETF (XSVM) 

Known for its focus on value stocks with rising share prices, XSVM boasts the best five-year average annual return of 13.6% among all small-cap equity ETFs.

Invesco Russell 1000 Dynamic Multifactor ETF (OMFL)

Despite the broad market struggles, OMFL managed a gain of 2.2% in the past 12 months with a five-year average annual gain of 13.8%.

Invesco Zacks Multi-Asset Income ETF (CVY)

This aggressive allocation fund typically has 85% or more of its shareholders’ money at work in stocks, with a high dividend yield of 4.9%.

iShares Core Growth Allocation ETF (AOR)

A moderate allocation fund with 50% to 70% of its shareholders’ money in stocks, offering a dividend yield of 2.1% and a 5-year average annual return of 3.9%.

iShares Core Moderate Allocation ETF (AOM)

This fund keeps 30% to 50% of its shareholders’ money in stocks, offering a dividend yield of 2.2% and a 5-year average annual return of 2.8%.

Nuveen ESG Large-Cap Growth ETF (NULG)

An ESG-friendly option with a 5-year average annual return of 12.9%, outperforming the S&P 500 by more than three percentage points.

VictoryShares USAA Core Short-Term Bond ETF (USTB)

This ETF focuses on shorter-duration bonds with a dividend yield of 2.7% and a 5-year average annual return of 2.2%.

Stocks

In the world of Wall Street, there’s a lot of chatter about the movers and shakers in the NASDAQ-100. After all, it’s a compilation of 100 of the largest domestic and international non-financial companies listed on the NASDAQ stock exchange. You’ve got the usual suspects – the technology heavyweights – but there are also some under-the-radar names that are making waves in their respective industries.

Let’s kick things off with Liberty Broadband (LBRDA). This consumer discretionary company is currently priced at $77.59, with a market cap of around $11.34 billion. Despite being a somewhat lesser-known entity in the NASDAQ-100, it’s been making strategic moves in the market. Earlier this year, Liberty Broadband announced its intention to offer $1,100 million of 3.125% exchangeable senior debentures due 2053. They were able to close this private offering at $1,265 million, which shows investor confidence in their corporate strategies. The company’s debt decreased by $150 million in Q1 2023 due to repurchases. Liberty Broadband also reported a net income of $69 million in its first quarter of 2023. Despite this, the company’s stock has an expected upside of a whopping 87.4%, indicating that analysts believe there’s still room for growth​.

Next up is ViacomCBS (VIACA), a giant in the consumer discretionary sector. Despite its size, the company’s stock is currently trading at a relatively affordable $17.47. The market cap stands at $11.31 billion. However, analysts currently don’t have a price target on the stock​.

Moving on to the business services sector, we have DocuSign (DOCU), a company that is riding the wave of the digital transformation. With a market cap of $11.22 billion and a stock price of $55.45, analysts have given it a ‘hold’ recommendation. Despite this, the stock has an expected upside of 13.5%, indicating that the growth story isn’t over just yet​.

Chipotle Mexican Grill (CMG) has exhibited impressive resilience in the face of inflation. The fast-casual eatery, known for its build-your-own burritos, bowls, and more, saw a revenue growth of 13.7% in the third quarter of 2023, partly due to strategic price increases. Chipotle is also expanding its footprint, with plans to open 255 to 285 new restaurants in 2024. Despite potential challenges of inflation, the stock is expected to grow, with a consensus price target of about $1,775, up from its current price below $1,500​.

Dollar General (DG), a major player in the discount retail arena, has managed to swim against the current, with its stock up 3% in 2022. It’s worth noting that the S&P 500 fell nearly 20% during the same period. The retail giant has witnessed increased foot traffic and customer spending, despite the pressures of inflation. The company plans to open 1,050 stores in 2023, including 35 in Mexico, which is anticipated to contribute to continued growth​​.

For those looking to diversify into pharma stocks, Eli Lilly (LLY) is a name to consider. This pharmaceutical titan saw its stock rise 31% in 2022, largely thanks to the launch of its type 2 diabetes drug, Mounjaro, and growth from other drugs. Lilly’s revenue grew 7% in the third quarter, and earnings per share increased by 12% on a non-GAAP basis. The company has a strong product pipeline, with strong potential to grow. 

This is a brief overview of some of the companies from the NASDAQ-100 list on the source you provided. There are many more to discuss and analyze in detail such as Etsy (ETSY), Aspen Technology (AZPN), Flex (FLEX), Manhattan Associates (MANH), Bruker (BRKR), Jack Henry & Associates (JKHY), Chesapeake Energy (CHK), and Gen Digital (GEN), each with their own unique story in the marketplace​​.

How to Deal With the Stock Market

As an astute investor, you’ve probably heard the adage: “Buy and hold forever.” This piece of wisdom, advocated by legendary investor Warren Buffet, emphasizes the value of long-term investments in mitigating the risks of stock market volatility​. The essence of this approach is not simply investing in stocks but rather in the businesses behind them.

In the world of financial wizardry, stocks are powerful tools that allow investors to generate passive income. However, success in this arena requires the ability to distinguish between investing in a company’s business versus merely its stocks. Here’s why: businesses often require additional capital to execute their growth strategies. To fulfill this need, they lure investors who, in return, receive a proportionate share in the business, represented by the stocks. This share accords the investor rights to:

• Receive a percentage of the profit
• Participate in business management
• Claim their share of assets in the event of the company’s liquidation
• Dispose of their stocks at their discretion​​

One can potentially cash in on stocks in two ways: through dividends or by capitalizing on stock price fluctuations. Dividend sizes are not fixed and are subject to the decision of the shareholder meeting. Some companies might distribute 5% of their profit as dividends, while others might go up to 50%. But, considering that most companies reinvest a large part of their income into growth, expecting dividends of 80-90% is unrealistic. In the U.S. it’s 1-3%​.

The other strategy is to invest in undervalued stocks that have a promising future. This approach requires the foresight to identify stocks that are currently undervalued but have the potential to appreciate significantly in the future​.

Cryptocurrency Resurgence

2022 was a tough year for crypto, but 2023 might be a better year for this digital asset class. The Fed launched its 12-week central bank digital currency (CBDC) proof-of-concept project in mid-November, and legislators remain excited to advance crypto regulation legislation, potentially leading to a resurgence in this asset class​. 

Here are the top ten cryptocurrencies by market capitalization as of May 23, 2023 you may pay attention to invest:

• Bitcoin (BTC): $980 billion
• Ethereum (ETH): $450 billion
• Binance Coin (BNB): $80 billion
• Tether (USDT): $73 billion
• USD Coin (USDC): $43 billion
• Ripple (XRP): $40 billion
• Cardano (ADA): $39 billion
• Solana (SOL): $35 billion
• Polkadot (DOT): $30 billion
• Dogecoin (DOGE): $28 billion

Cryptocurrency investments can be a rewarding but highly volatile investment option. Remember some basic advice points to consider:

Understand Blockchain Technology: Blockchain is the underlying technology for most cryptocurrencies. Understanding how it works will give you a better understanding of the cryptocurrencies you’re investing in.

Diversify Your Portfolio: Just like traditional investments, it’s beneficial to diversify your cryptocurrency portfolio. This can help mitigate risk.

Research Before Investing: Cryptocurrencies can vary greatly in their design and purpose. Some are meant to be digital currencies, while others represent a service or product. Understand the purpose of a cryptocurrency before investing in it.

Only Invest What You Can Afford to Lose: Cryptocurrencies are known for their volatility. It’s possible for values to drop significantly in a short amount of time.

Consider the Regulatory Environment: The regulatory landscape for cryptocurrencies is constantly evolving. Changes in regulations can significantly impact the value of a cryptocurrency.

Security: Make sure to use secure wallets and cryptocurrency exchanges. Be cautious of scams and phishing attempts.

Long-term vs Short-term: Determine your investment strategy—long-term hold vs. short-term trading. Both strategies have their own risks and potential benefits.

Keep Up with Market Trends: Cryptocurrency markets can be influenced by different factors than traditional financial markets. It’s important to stay informed about the latest news and trends in the cryptocurrency world.

Outcome

Please note that the above information is based on the current economic trends and predictions available as of May 2023. The actual outcomes may vary based on various economic factors and global events. It’s always a good idea to research thoroughly and/or consult with a financial advisor before making any investment decisions.