With inflation starting to turn the corner, Luke believes 2022’s pain is about to turn into 2023’s gain!
And it’s not just inflation. Every single metric that turned this market into a bear market is now flashing indicators that the tide is turning yet again. It seems a rally is on the horizon.
Recall that in 2022, we’ve dealt with rising inflation, an increasingly aggressive Fed, rising Treasury yields, and shrinking corporate profit margins. In 2023, Luke believes that we’ll get just the opposite on all fronts. Luke sees inflation turning to disinflation. And he sees our overheated labor market cooling down as corporations lay off employees and expand their operating leverage.
We’re sympathetic to the employees caught in the crossfire here. But in that environment, the Fed will have to pivot dovish, ultimately creating the sort of conditions that allow growth stocks (and the consumer) to thrive.
Major Rally in 2023
That is why Luke is incredibly bullish on a massive rally materializing in 2023. So, when it comes to investing, what’s going to work? And maybe more importantly, what’s not?
All the trends that were pertinent here in 2022 will reverse course as we head into 2023. Headwinds will become tailwinds, and vice versa. By that same token, what worked in financial markets will reverse course, too – and crash.
So, what worked exceptionally well in 2022? Energy, oil, commodities. Luke thinks they’re going to crash in ’23. (In fact, as Luke points out, this past quarter’s 13F filings show that hedge funds are cashing out on oil. Follow the smart money before those energy trades fizzle.) Similarly, we’re confident bonds will excel over the coming year. As inflation continues to cool and the Fed pivots dovish, yields will collapse – and long bonds will prove a great strategy.
In 2022, soaring interest rates have caused the housing market to nosedive. It reasons that a dovish Fed and stabilizing (or falling) rates in ’23 will turn the tide for housing, and those stocks will rebound.
And don’t forget to add those high-quality tech stocks to your portfolio, says Luke. Hot inflation permeated the markets this year and put a chokehold on tech. As it’s stamped out, investors will regain their excitement for innovation, and tech stocks will take to the skies once again.
COVID’s emergence in March 2020 kickstarted years of pandemic-related burdens on the markets. But in 2023, we’ll finally enter a new era of market expansion. As Luke puts it, it should be the start of a great decade for growth.
Obviously, we’re incredibly bullish on emerging technologies. And one such innovation that’s enthralled us is quantum computing, specifically because of its potential to transform the EV landscape and produce high-performance electric vehicles. Well, now Bosch and IBM (IBM) have teamed up to use quantum computing for EV manufacturing.
One of the problems plaguing this industry is the limited supply of the metals used in batteries. Bosch is attempting to tackle this problem head-on. Quantum computers can run simulations infinitely faster and more accurate than classical processors. So, by using quantum computers to simulate the recreation of rare Earth minerals, we may be able to manufacture them in labs using more abundant materials.
Luke believes quantum computers are at a point where they can be useful in the real world. They’ve moved from theory to reality, and companies are starting to unlock their value adds. It’s the first inning of the game for quantum computing, and Luke thinks there’s a long and promising game ahead. He says that now is the time to buy and hold quantum computing stocks for the next few years. The gains could be pretty tremendous for this space.
The Best Use of the Metaverse?
Last week, one of our favorite metaverse stocks, Matterport (MTTR), popped big on earnings. The company had a fantastic quarter. Revenue growth is reaccelerating. Margins are expanding. Supply chain issues are improving. Product revenue growth is turning around. Subscriber growth is strong.
Plus, Luke’s not afraid to say it: Matterport is the metaverse done right. Building digital twins can add a lot of value for people who own real estate, whether that’s commercial or residential. And he’s confident that this approach holds much more widespread and immediate value than what other companies are building (*cough cough* Meta (META)).
And as the company’s growth trends are stabilizing and improving, the stock should follow suit. With MTTR’s discounted valuation, we see a lot of runway ahead here – especially ahead of a potential mega rally.
To hear Luke’s full take on the markets this week, make sure to watch our entire episode of Hypergrowth Investing!
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.