What a year 2022 was. The rampant gains of 2020 were handed back by most investors; retail and professionals alike, and the mild residual smugness of 2021 received an icy bucket of water to the face.
Normal investing rules did not seem to apply in 2022. Professional equities commentators were proved consistently wrong. Battery metals equities that should have been on fire regressed much of their gains. The realities of how oil flows through the markets meant that we didn't see the kind of curves that were hoped for despite Mr Putin's efforts. After a disconcerting year, precious metals ended the year at c.USD$1,800 for crying out loud. But no one cared, apart from the incredulous retail gold bulls trying to make sense of it all by becoming macro experts over night. But considering the huge value destruction for bonds & equities and sector wide decoupling for value stocks, we should expect a rebound in 2023, right? Right mother?
Well the good news is that Goldmans and JP Morgan think 2023 is the year for commodities. The bad news is that they also said that in 2019. But take comfort in their long term horizon and assumptions. Under investment in this tiny, cash constrained sector that we love and adore means commodities shortages. They also have realised that it takes a long time to do anything about it. Good points indeed. And as one of my favourite game show hosts used to say, 'points make prizes!'.
So what prizes can the contestants expect to see in 2023. Well firstly, don't get too excited too early. We expect it to still be a waiting game for the first 6 months. Ukraine rumbles on. China needs time to iron out the large 'wrinkles' caused by the opening of their boarders, after covid protests. Economies try to dampen inflationary enablers. Reality bombs have wiped the smiles from the tech and crypto sectors with the unwanted, but necessary, effect of out wiping billions of dollars and accompanying enthusiasm for equities investing. And apologies, but I'll say it again as I have from the beginning of 2022, disposable income and discretionary spend have had knock on effects outside of pure equities too. Small changes in consumer buying behaviour ripples through all markets. Confidence is shattered. Is there less money around? Nope. It's just in different hands. So what do we do?
I love it when the storm finally hits the shore. The strong survive, but the courageous triumph. So we need to pick well.
I imagine, and hope, that many of you have been reviewing your broad investment portfolio recently. And perhaps there was a vague attempt at a family strategy session during the days that followed Christmas. I suspect many have trimmed and reallocated, and a few prepared to hunker down or double down on their existing strategy without concern.
For us, our long term investments continue to be a hold. And NEW News, we have jumped both feet into copper with a small private investment into a copper mine/exploration company. Wish us well. Property and land will always be a large part of the plan. My trip through Cambodia reinforced our view of how Asia is advancing in its need for housing and commercial space for its growing population. The change in 6 short years since I was last there was evident everywhere. All of that also needs the stuff those 'pesky' miners dig out of the ground.
We did however sell down our 'Witches & Warlock Fund' because it's been 'Mordor' out there. Whilst amusing at times and a great conversation piece over a glass of wine, it was time to be mutually exclusive. More of this when I speak to Merlin Marr-Johnson (see what I did there?), later this week for a review of 2022 highlights.
It's also worth mentioning that our foray into tech company analysis this year has attracted a lot of new previously 'tech only investors' to our humble platform. Quadrupling the size of our audience. Yes, that is how small our sector is! So we welcome them. And we wish them every success this year. It is encouraging to see younger investors coming in too.
Very much looking forward to hearing from you all and reading your always smart observations and conversations.