Investing Update: 3 Stocks For 2023
Investing Update: 3 Stocks For 2023
What I'm buying selling & watching
This week saw the S&P 500 rally up to the 200-day moving average of 3,981 just to once again bounce right back down off of it. That makes fives times in the past year that rallies have failed at breaking through the 200-day moving average.
It was looking like the setup for another bull market was forming but those hopes seems to be on hold for the time being. We will see where earnings begin to steer the market as companies start to report.
Year-End 2022 Charts
I love this scatter chart of the S&P 500 from 1926 to 2022. You can clearly see where each year has finished. It’s important to realize how many of the years are positive returns versus negative return years.
Here is where the Dow components finished up 2022. Chevron lead for 2022 while Salesforce finishesd last. The surprise to me was seeing IBM up 10.7% for the year.
My Favorite Performance Chart
At the conclusion of every year this is my favorite chart to review. It’s interesting to see what asset class returns the past year and then to look back and compare versus other years. You can just sit and look at chart for what seems like hours.
Investors Underweight US Stocks Most Since October 2005
The BofA Fund Managers Survey results came out this week. It showed that global investors are the most underweight US stocks since October of 2005. This is a screaming bullish indicator for stocks to me because this will eventually turn. With a long-term time horizon in the stock market, this says we’re in an area to buy equities. Years from now when we look back, I think this will be a chart where we say, that was a time to buy stocks.
3 Stocks For 2023
Deere DE 0.00%↑ My newest stock buy for 2023 is Deere. I've wanted to make a play on farming and the increasing global demand for food. This company has global business in agricultural machinery, construction & forestry, lawn & garden care equipment, maintenance machines and has now bought a company in the road paving space (Wirtgen).
They’ve boosted their technology with a robotic fertilizing system to reduce fertilizer usage by using satellite technology. An electric excavator is being introduced. This week they also announced a partnership with Microsoft to provide efficiencies to their dealer network.
Deere is an industrial sector winner with an excellent valuation along with a great looking chart that to me looks to be consolidating at these levels and ready to breakout to new all-time highs. I think this stock is still cheap at a 17 P/E, steady EPS growth with a 1.17% dividend. Just a lot to like with Deere.
Nvidia NVDA 0.00%↑ With the signs of easing inflation, one sector of the market that has bounced is the semiconductors. It has held above its 200-day moving average. This was an area I had wrote about previously in my Investing Update: What's Priced In? This was when I wanted to increase my exposure as I viewed semis as being oversold like oil was during the pandemic. I bought the SMH SMH 0.00%↑ Semiconductor ETF at $167. It's up over 36% from that point and I do still own it.
The best in class in this sector is Nvidia. I’ve added to my position a few times in the back half of last year. I bought the SMH ETF as I wanted more exposure to semis in addition to Nvidia and didn’t love any other individual stock. I expect Nvidia to be among the biggest winners as the market begins to turn bullish. It’s a high beta name so the ups and downs can bring volatility. After being down 50% in 2022, it’s up 25% so far in 2023 and from the lows it’s now up almost 65%.
With 84% of their revenue coming internationally and their high performance chips powering gaming, automotive, AI (artificial intelligence) and their rapidly growing data centers, I continue to remain heavily invested in Nvidia. It’s hard to find many stocks with as much upside as Nvidia presents over the long-term.
Amazon AMZN 0.00%↑ My third stock pick came down to Amazon or Alphabet GOOGL 0.00%↑. With both still under $100 a share these both are great long-term buys. I do own both and the final deciding factor was what stock was down more in 2022. Amazon was down 50% while Alphabet was down 39%.
Amazon is my second largest holding and I have added to it a few times toward the end of the year. It actually fell below its covid low of $83.83 on 3/12/20. It still dominates the retail/prime business, AWS the fast-growing cloud computing platform and now a potential of growing advertising as 50% of all product searches begin on Amazon.
The past few years has seen them invest heavily into their online retail transportation and fulfillment after the COVID surge. Now they're cutting costs and with their added efficiencies combined with being down 50% in 2022, I think this behemoth of a company is ripe for a surge. Analysts 12-month price targets for Amazon has an implied upside of over 63%.
Moves I’ve Made
Deere DE 0.00%↑ As I said up above in 3 stocks for 2023, I've started a position in Deere. I've watched this name for some time and I believe there is a lot to like about this company. I bought shares at $410.
S&P 500 Index After my last Investing Update: 2022 Recap & 2023 Outlook on 1/7, I did buy more of the S&P 500 the following week. I still keep continuing to add each month to this holding.
T. Rowe Price New Horizons I’ve reduced my stake in this fund. With the run up in high growth tech this past week, I decided to sell some of this holding. I have some individual stocks where I’d rather have my funds.
The Coffee Table ☕
Kris Abdelmessih who writes Moontower wrote a piece Dizziness of Freedom which had a lot of thought provoking information. This was the first time I’ve come across his work and found this post very interesting.
Is This a New Bull Market? by Michael Batnick was as an interesting read. He wrote if things are looking more bullish or bearish based on charts to start 2023.
Morgan Housel’s post FOMO: The Worst Financial Trait hit on something many people don’t fully realize. FOMO is so powerful and it directs the way a lot of people act financially.
Breckenridge Bourbon- This was the first bourbon I took a liking to and got me started in trying different bourbons. With it being only 86 proof it mixes in well for an old fashioned or can be sipped. It’s rather inexpensive and widely available for purchase at most liquor and grocery stores. Not rare or high-end, just a solid all around bourbon.
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Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion. Do your own research.