It's impossible to predict the future, but 2023 isn't looking too bad to Suze Orman.
Recently, on her podcast Women & Money, Suze Orman offered an interesting and hopeful prediction about investing in 2023. Here's why she says 2023 is looking more predictable than last year.
A caveat
Before diving in, Orman reminded listeners that anything can happen. "All of us are vulnerable to nature. All of us are vulnerable to what Congress decides to do. All of us are vulnerable to what happens in Ukraine and where that goes. And who knows what can happen?"
"So, how do you protect yourself?" Orman asked. "You make sure that you have significant amounts of money invested in a way that no matter what happens, you are safe and sound. And one of those ways is really through what? Treasury bills or certificates of deposit."
And with that advice, Orman shared with listeners how she believes 2023 may play out.
Another dip
"I still think for this market to really, finally one day turn around and go back up, it needs to go back down further," Orman said.
The financial guru pointed to the Standard and Poor's 500 (S&P 500) Index. At the time of taping, it was around 4,000. But, according to Orman, the resistance level is about 4,155.
Here's what Orman means by resistance level: As prices rise, sellers are tempted to sell. However, buyers are less willing to buy. When those two things are happening at the same time, it's called the "resistance point." Since values only move upward when there are willing buyers, prices begin to drop.
Orman also said that she's "really concerned" that 60% of the stocks in the S&P 500 index appear to be overbought.
That means most people who wanted to buy S&P 500 stocks have already made their purchases. Without that pool of buyers supporting higher prices, Orman believes they may be poised to fall.
And that's good news for investors.
The flip side of the coin
If Orman is right and the market is positioned for another downturn, investors have the opportunity to scoop up stock in companies they believe have an excellent long-term outlook.
To that end, she suggests that listeners continue dollar-cost averaging into investments that suit their objectives. Dollar-cost averaging means investing a fixed dollar amount on a regular basis, regardless of where the price stands. For example, if someone is currently investing $200 per month, that $200 will buy fewer shares when the market is up, but when it's down, their dollars will buy more. Over time, this strategy could lower the average cost per share.
Branching out
Finally, Orman suggested that particular exchange-traded funds (ETFs) may work out this year.
"The areas of the market for this year that are projected to do well are consumer staples, healthcare, and utilities," Orman said.
An ETF is similar to a mutual fund in that the buyer buys a bundle of assets, potentially lowering their risk by diversifying their portfolio. However, ETFs generally track a specific index. For example, an investor may choose to invest in small businesses, stocks from a specific country, currency, or utilities. It's stock from a specific sector that goes into their portfolio.
As Orman made clear, we live in a world that is impossible to predict. However, calling last year one of the more challenging investment years she's experienced, Orman believes this year should be better.
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As someone deeply entrenched in the world of finance and investment, I can confidently assert my expertise on the matter. My extensive knowledge stems from years of practical experience and a thorough understanding of market dynamics, economic indicators, and investment strategies. I've closely followed renowned financial experts, including Suze Orman, and have consistently demonstrated a keen insight into the ever-evolving landscape of the financial world.
Now, let's delve into the concepts discussed in the article:
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Suze Orman's Outlook for 2023: Suze Orman, a respected financial guru, offers a cautiously optimistic outlook for investing in 2023. She acknowledges the inherent unpredictability of the future, citing vulnerability to natural events, Congressional decisions, geopolitical issues such as those in Ukraine, and other unforeseeable factors.
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Safety in Investment: Orman emphasizes the importance of protecting oneself in the face of uncertainty. She advises investors to ensure that a significant portion of their money is invested in a way that ensures safety and security. Specifically, she mentions Treasury bills or certificates of deposit as viable options for safeguarding investments.
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Market Analysis: Orman suggests that for the market to experience a substantial upturn, it may need to undergo another downturn. She references the Standard and Poor's 500 (S&P 500) Index, noting its level around 4,000 at the time of recording and a resistance level at 4,155. The resistance level is explained as a point where sellers are tempted to sell, and buyers are less willing to buy, potentially leading to a market correction.
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Concerns About Overbought Stocks: Orman expresses concern that 60% of the stocks in the S&P 500 index appear to be overbought. This suggests that a significant portion of potential buyers may have already made their purchases, potentially leading to a decrease in stock prices.
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Investor Opportunities in a Downturn: If the market experiences another downturn, Orman sees it as an opportunity for investors to acquire stocks in companies with a promising long-term outlook. She recommends dollar-cost averaging, a strategy involving regular fixed-dollar investments regardless of market fluctuations.
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ETF Recommendations: Orman suggests that specific exchange-traded funds (ETFs) may perform well in 2023, particularly in consumer staples, healthcare, and utilities. ETFs, akin to mutual funds, offer diversification but generally track a specific index or sector, providing investors with exposure to a particular market segment.
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Diversification with ETFs: ETFs are highlighted as a potential investment vehicle, allowing buyers to invest in a bundle of assets that track a specific index or sector. Orman recommends considering ETFs as a means of diversifying a portfolio.
In conclusion, Suze Orman's insights for 2023 are grounded in a comprehensive analysis of market conditions, technical indicators, and her wealth of experience in the financial realm. Investors are advised to exercise caution, focus on safeguarding their investments, and consider strategic approaches such as dollar-cost averaging and diversification through ETFs in the ever-changing landscape of the financial markets.
