How should investors position their portfolios if the market bottoms in 2023?
The market goes on sale only a few times a decade. We may be near one of those points if you drown out the noise.
A Finimize survey last week showed that 80% of 2,000 retail investors believe the market will bottom within the next six months.
Question: Aren’t we expected to enter a recession next year?
Yes, except market prices are forward-looking. It’s why markets peaked last year, way before the economy began slowing.
And it’s also why the stock market will likely bottom before the economy does.
Let’s assume the market bottoms next year…
How should investors position their portfolios for growth?
Here’s a Bespoke chart showing which sectors have performed the best 13 years after the 2009 market bottom.
- Only three sectors outperformed the S&P 500 — Technology, Consumer Discretionary and Financials.
- In the past, the Tech and Consumer Discretionary Sectors tend to lead the way during market recoveries.
They’re also two of the heaviest-hit sectors this year.
From the 2021 peak, the Tech and Consumer Discretionary Sectors have fallen 33% and 23%, respectively. Not quite at 2009 levels yet — but close.
Not sure what to buy within the sectors?
ETFs are your friends.
- The Vanguard Information Technology ETF (NYSE:VGT) — which tracks the Information Technology Sector.
- The Vanguard Consumer Discretionary ETF (NYSE:VCR) — which tracks the Consumer Discretionary Sector.
An easier way? Consider an ETF like the Invesco QQQ Trust (NASDAQ:QQQ) — which tracks the Nasdaq-100 — a basket of the ~100 largest non-financial companies.
Here’s the ETF’s sector breakdown: