Cela's Weekly Insights - January 8, 2023

Many investors are eager to put 2022 behind them, and with good reason. Indices like the S&P 500, Dow Jones, DAX 40, Euro Stoxx 50, and NASDAQ 100 all experienced significant losses last year. Some of these markets made a slight recovery towards the end of the year, but it wasn't enough to salvage the overall performance.

The good news is that two consecutive years of losses are uncommon in the stock market, especially in the S&P 500. On average, the S&P 500 has returned around 10% per year since 1928, and it has only suffered two or more consecutive annual losses four times in that time period. While this may seem to suggest that the odds are in our favor for a better year, it's important to remember that investing is not always that simple.

S&P 500: Consecutive annual losses from 1928 to 2022

Market performance for the period of December 30, 2022 to January 6, 2023

The first week of the new year has shown positive performance, particularly in the German (DAX 40) and Chinese (Hang Seng) stock markets. While it's encouraging to see this positive start, I believe that 2023 will likely be a volatile but ultimately positive year for the markets. Therefore, it's important for investors to consider a number of factors when investing in a volatile market, including:

1. Diversification: It's important to diversify your portfolio so that you are not overly reliant on any one particular asset or sector. This can help to mitigate risk and protect you from the volatility of any one market.
2. Risk tolerance: It's important to consider your personal risk tolerance when investing in a volatile market. If you are not comfortable with the potential for significant losses, you may want to consider more conservative investments.
3. Long-term perspective: It's important to keep a long-term perspective when investing, especially in a volatile market. While it can be tempting to try to time the market or make rapid trades in response to short-term fluctuations, this can be risky. Instead, it's generally more advisable to take a long-term approach and focus on building a diverse, well-balanced portfolio that can weather market ups and downs.

Oh yeah, and probably the most important thing is knowing what you're investing in. That can help you make informed decisions about where to allocate your capital. If you don't understand the business model behind an investment, you may be taking on more risk than you realize, or you may be missing out on opportunities to invest in companies that are more aligned with your values or long-term goals.

Additionally, understanding the business models behind your investments can help you to better understand the potential risks and rewards associated with those investments. Finally, it's important to remember that investing is not just a numbers game - it's about backing businesses that you believe in and that have the potential to generate value over the long-term. By taking the time to understand the businesses behind your investments, you can make more informed, strategic investment decisions that are better aligned with your goals and values.

I hope that everyone has a great start to 2023! As we begin a new year, it's a time to set new goals and make plans for the future. It's also a time to be hopeful and optimistic about what the year ahead will bring. As you consider your investments for the coming year, I wish you good luck on the stock market. May your investments yield good returns and may you experience financial success in the year ahead. Here's to a happy and prosperous 2023!

*** Last Week's Survey Results | Calender Week 01/2023

I'm working on a project this year and would love for you to participate by taking a weekly survey. I'll be sharing the results in my newsletter, Cela's Weekly Insights, every Sunday. Last week, 61% of you here on LinkedIn (114 total votes) predicted that the S&P 500 would have a positive week. The results were the same on Instagram, with 61% of respondents (44 total votes) forecasting a positive week for the S&P 500. As it turns out, the S&P 500 finished the first calendar week of 2023 with a performance of +1.45%.

Now it's time to predict the performance of the S&P 500 in the second calendar week of 2023. What do you think?

Please keep in mind that the purpose of these weekly surveys is not to encourage short-term investing or speculation. I'll be publishing the results from the entire year at the end of 2023 to test my hypothesis. Thank you for your participation!

That's all for today folks. If you've made it this far, thanks for tuning in ??.

Cheerio!

Endrit Cela The Investment Fella - #ECB #mm ??