With another year in the books, it’s time for investors to reassess what worked and what didn’t with a stock market recap. Generally speaking, in both market participation and life, you want to look forward. But learning from the past can help guide your new path to potentially more profitable ventures.
As with any other stock market review of 2023, I acknowledge the obvious winner and loser. For the former category, it’s quite clear that technology (especially related to artificial intelligence) won big. Regarding the latter, the doom-and-gloom narrative – I think it’s called “crash bros” if I’m not mistaken – lost out.
However, with another run at the topic, I’d like to explore some other ideas. Below is my year-end stock market recap for biggest winner, loser and the key lesson to learn.
Triumph: The American Consumer
When it comes to the ultimate stock market recap, I don’t think we can ignore the American consumer. Stereotypically, Americans suffer an image of the profligate spender. And let’s face it – that’s not exactly an undeserved label. After all, total credit card debt surpassed the $1 trillion level last year.
Instinctively, I’d say that such a scenario presents a poor outlook because you don’t know what’s going to happen tomorrow. It’s like the Los Angeles Dodgers and their massive $700 million contract awarded to two-way phenom Shohei Ohtani. Yes, by most accounts, the Dodgers should make their money back – and then some – because Ohtani is an international superstar, in a similar vein to Lionel Messi or Cristiano Ronaldo.
However, as regression and other factors kick in, no guarantees exist that Ohtani can maintain his gargantuan off-field marketing machinery. Yet the Dodgers took the risk, just like the American consumer did. For example, they did whatever was necessary to bring in retail joy during the holidays.
Presumably, if you give the American consumer lower borrowing costs, they’ll be more incentivized to spend.
Turbulence: Solar Stocks
If there was a clear sector loser in 2023, it would have to be in my opinion solar stocks. For example, one of the sector leaders Enphase Energy (NASDAQ:ENPH) – which develops and manufactures solar micro-inverters and battery energy storage systems – began slipping heavily since December 2022. In 2023, ENPH suffered a loss of nearly 48% of equity value.
Fundamentally, Enphase and its peers suffered from myriad headwinds. However, any stock market recap covering this space will identify high interest rates as a critical culprit. With borrowing costs rising since 2022, the obstacle crimped the solar industry’s total addressable market. As well, it hurt the business end, stymieing individual companies’ efforts to expand their business footprint.
However, a monetary policy pivot could change circumstances favorably for solar stocks. Anyone who writes a stock market review will surely mention the Federal Reserve. Recently, Fed Chair Jerome Powell hinted at the possibility of interest rate cuts this year. It’s not a for-sure action. However, it symbolizes a 180 from prior hawkish strategies.
ENPH stock gained over 21% in the trailing month. So, the sector is worth watching in the new year.
Takeaway: Watch Gen Z
Looking ahead to 2024, my best takeaway from this stock market recap would be to consider Generation Z. Specifically, the oldest members of this age cohort have entered into the workforce. Its peers will follow close behind year after year. Further, the ones in the workforce should see their purchasing power expand.
What does this mean? Essentially, we can stop putting so much importance on what millennials think and focus more on Gen Z. Members of this cohort represent the future while millennials are mostly about what’s in the present. So, the kind of music they listen to, the types of content they consume, whom they vote for and what type of investments they consider could all impact your portfolio.
Unsurprisingly, 94% of cryptocurrency buyers hail from the Gen Z and millennial categories. More than likely, this statistic will continue favoring younger and younger investors. Just as the economic boom of the 1980s and 1990s handsomely benefited baby boomers, the same might apply for cryptos for zoomers.
Again, if you take anything from this stock market review, it’s that you should watch Gen Z.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
