Multiple stablecoins slipped their pegs in 2022-including TerraUSD and Tether, fueling a midyear crypto crash that wiped out hundreds of billions in value. It is pretty easy to argue that 2023 has to be a better year for crypto than 2022 since it could hardly be worse. Companies seeking to whittle payroll may pursue leaner staffing protocols, leaving plenty of talent on the sidelines to appease shareholders. That mid-career-especially in tech-centric specialties-could weigh on unemployment figures. While experts predict that new college grads won’t be at a loss for job offers, entry-level positions have less impact on corporate bottom lines. Real estate startups like Better, Redfin and Opendoor have slashed headcounts as rising rates and home prices dried-up mortgage applications, closed sales and corporate revenues.Īs cash-strapped public companies try to shore up their balance sheets ahead of a potential recession, the year ahead could see the undoing of the historically strong U.S. While boldface tech names have seen very high-profile waves of labor force reductions, other industries have seen their own losses. Since mid-November, tens of thousands of employees have been laid off from tech behemoths like Meta, Amazon, Lyft and Twitter. The hashtag of the year on social media could be #layoff. While illiquid for one year after purchase, it’s tough to argue with a guaranteed rate of return backed by the full faith of Uncle Sam. Treasury was selling Taylor Swift concert tickets.įor those seeking alpha for their extra cash, I bonds at the lower (yet still phenomenal) 6.89% rate are available through April 30, 2023. 28-the last purchase day before the semiannual rate reset-and crashed the Treasury Direct website. Investors eager to lock in that phenomenal rate bought $979 million in I bonds on Friday, Oct. In April 2022, the I bond rate jumped to a historic high of 9.62%, contrasting the S&P’s year-to-date 15% decline. If there’s a silver lining to the inflationary cloud, it’s the newfound popularity of savings bonds-specifically Series I savings bonds. While expense ratios trend higher than the average fund, the performance of alternative assets may outweigh the higher costs. Previously reserved for accredited investors and seasoned traders, everyday investors can easily access alternative asset strategies like commodities and managed futures through a decent selection of low-cost exchange-traded funds (ETFs) and mutual funds. With their low correlation to traditional asset classes like stocks and bonds, alternatives could blunt inflation- and recession-induced volatility and buoy returns more than dividend stocks alone. The portfolio for 2023-no matter your net worth, risk tolerance, or time horizon-should include an increased allocation to alternatives. Speaking of broader diversification, 2023 holds promise for alternative investments finally earning a place in everyday investor portfolios. While putting a “buy low” mantra into heavy rotation on your morning meditation playlist is never a bad idea, 2023 may prove that buy-and-hold investors need more than equities and fixed income to hedge against unpredictable markets. Improving investor sentiment will likely be tied to easing inflation, so the year ahead could prove tricky for traditional asset allocation models. In the third quarter of 2022, the venerable 60/40 portfolio suffered greater losses than its stocks-only counterpart, causing questions about whether the O.G. However, aggressive interest rate hikes have bond yields falling along with stock prices. ![]() Ordinarily, bonds would take the edge off a bear market. ![]() While stocks have officially emerged from the bear market in the second half of 2022, stock markets remain down by double-digits. June 2022 ushered in the second bear market since 2020, sending investors scrambling for cover. The Covid-19 stock market rocketship crashed and burned. That suggests that Treasury Inflation Protected Securities ( TIPS) and I bonds should remain popular inflation-fighting investments. If that happens, it won’t help the inflation fight. Morningstar predicts that the Fed will ease monetary policy and lower interest rates to roughly 3% by the end of 2023. Many experts suggest that’s unlikely, although it’s worth noting that the Fed’s six 2022 rate hikes will take a while to work their way through the economy. The big question for 2023 is whether inflation will drop toward the Fed’s 2% target rate. From the gas pump to the grocery store to your 401(k), investors have higher costs and less valuable dollars to invest in the future. Inflation was the economic glitter of 2022-it stuck to everything.
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