2023 has started positively for investors. Our strategy has returned +16%, doubling the +8% return of the MSCI World index ($SWDA.L).
We believe the market will fall in 2023, but may continue to show resilience in the near term because April has been the best month of the year for the stock market since 1987.
Some investors discount seasonality and say it is simply due to chance, but there are in fact good reasons for it.
Bonuses and tax refunds are paid out in the early months of the year. Some of that cash finds its way to the stock market, boosting returns between January and April. In the summer, conversely, money exists the market because this is when Americans have to pay for university tuition.
There are many other interest seasonal patterns. The stock market tends to rise around the turn of the month and stagnate for the rest of the month. This pattern might arise because paydays cluster around the 30th and 1st of each month, though this hypothesis has been contested.
Starting from May, we believe the market will have a more difficult time. Leading economic indicators indicate that a recession will arrive by the end of the year.
Our plan is to run a more defensive portfolio than normal for most of 2023 until a recession is properly discounted in prices.
Kinross Gold and Vodafone were sold. Positions were opened in Shell and Bayer.