Three investor lessons for 2023 and three stock picks for 2024
In 2023 investors learnt three things – 1-that company's share price (valuation) is based on future cash flows..
...not necessarily how it performed in the past. Meaning, even though aggregate companies earnings declined in the US and Australia, the S&P500 rose about 19%, the tech heavy Nasdaq (the biggest 100 tech stocks) rose 48%, as bets are on for the US central bank to cut interest rates. And once the Fed cuts rates, that would support aggregate company earnings (profits) picking up.
2 -Secondly – investors in 2023 would have learnt 'quality is key.
Wonderful companies with high repeatable cashflows and a strong outlook, outperformed the market. Why? We know household disposable incomes nosedived as interest rates in Australia hit 12-year highs, mortgage rates in the US hit 20 year highs, business bankruptcies increased. But 'quality' companies with strong earnings that exceeded outgoings, pierced through the icebergs of hard times and mapped out blue sky ahead. Such as; the world' s biggest chip company Nvidia $NVIDIA(NVDA.US$ shares +218%, the worldsleading EV company Tesla $Tesla(TSLA.US$ shares +96% and Australian KFC and Taco Bell franchise Collins Foods $Collins Foods Ltd(CKF.AU$ shares rose 62%.
This is also why we shouldn't ignore a company that we think is ‘too expensive’, as Warren Buffett and the late Charlie Munger would say "it is far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
3-Thirdly – investors in 2023 learnt about the need to review their portfolios and adjust when the tides change.
One of Warren Buffett's most famous quotes embodies this; “only when the tide goes out, you discoverer who has been swimming naked'.
Commodities, gold and companies linked in Bitcoin's accent (such as Nvidia $NVIDIA(NVDA.US$ and Block $Block(SQ.US$ (the company behind Square) have started to see substantial moves higher in the back end of 2023, essentially mapping out a runaway for a big turnaround year for commodities, gold and bitcoin and bitcoin linked companies.
Copper is an economic growth proxy, with China being the biggest consumer. Imports into China saw there biggest jump in two years on month on month basis rising 10%, showing China’s economic is starting to finally make waves. The almost 10% fall of the US dollar index from its peak is also supporting buying as well.
Gold recently hit a record high, up 11% from October to now (as at the time of writing). Its rally will likely continue given the Fed is likely to cut interest rates to avert a recession. Rate cuts from the Fed will likely push down the USD and push up gold (given their inverse relationship). Also consider, gold will likely hit new record highs again if history repeats itself - as gold historically rallies when the Fed cuts rates. In 2019 gold 61% to a new high after the Fed cut rats.
Consider Bitcoin cracked a 175% gain so far this year getting over $43,000, as on bets of lower interest rates and greater demand from exchange-traded funds. Plus Bitcoin's mainstream usage is increasing. Public profitable companies such as Tesla $Tesla(TSLA.US$ , and Microsoft $Microsoft(MSFT.US$ accept Bitcoin as payment, you can use Bitcoin to pay for flights, coffees etc. Jack Dorseys company, Block $Block(SQ.US$ makes 40% of its revenue from Bitcoin and its shares are rallying up of their lows in anticipation of a higher price in 2024. Also consider, Nvidia $NVIDIA(NVDA.US$ , the stand out mega cap stock of 2023, also sells chips mining cryptocurrency. These are just some things to consider.
For 2024 what stocks am I most bullish on?
As per my recent moomoo webinar, the three stocks that I am most bullish on in 2024 are Block $Block(SQ.US$ Uber $Uber Technologies(UBER.US$ and Nvidia $NVIDIA(NVDA.US$
For more details, stay tuned to moomoo I will cover why I am bullish on these three stocks in our webinar next week.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Moomoo Official Market Strategist
Investment strategist, featured on TV, radio, newspapers.
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