It has been a year full of contradictions.
The recession drum is beating, interest rates are rising and the stock market is in a slump, and yet retail sales are up 6.5% over the past 12 months, with a 7.1% increase in the cost of living.
There are other reasons why people should consider cutting back in 2023. The personal savings rate, or personal savings as a percentage of disposable income, or the share of income left over after paying taxes and spending money, reached 2.4% in the third quarter. 3.4% in the previous quarter, according to the Bureau of Economic Analysis.
“There are signs that people are holding back on certain expenses. “
This is the lowest level since the Great Depression and the eighth-lowest quarterly reading on record (since 1947). Adjusted for inflation, savings are 88% below their peak in 2020 and 61% below their pre-pandemic level, according to government data. In November, the personal savings rate was 2.4% against 2.2% in October.
Are people buying stocks during a bear market and/or depleted their savings during the pandemic? Whatever the reasons, smarter investment and spending decisions appear to be the most prudent approach – especially given the uncertain economic outlook for 2023.
There are already signs that people are pulling back on some spending. Retail sales fell 0.6% month-on-month in November to record their biggest decline in almost a year, largely due to weaker auto sales, although they rose over the year.
About these new cars: Total new car sales for 2022 are projected to decline 8.4% year over year to 13,687,000 units, according to a joint forecast by JD Power and LMC Automotive. MarketWatch reporter Philip van Doorn explains all the reasons you might want to skip buying a new car in 2023, along with rising prices.
So what else should you be saving your money for in 2023? MarketWatch writers give their verdict below.
During the pandemic, people loved to buy special purpose vehicles, known as SPACs. According to SPAC Insider, 613 SPACs were listed on US stock exchanges in 2021 through initial public offerings. A year ago, there were 248 SPAC IPOs. Never before had there been more than 100 of them in a single year. There were SPACs associated with Donald Trump and Serena Williams. There were so many that one was called Just Another Acquisition Corp.
SPACs exist as a vehicle for taking private companies public, and in theory give shell companies a faster and less regulatory-burdened means of accessing public capital. The US Securities and Exchange Commission warned investors last April that the so-called benefits of the SPAC process, such as reduced legal liability, may not hold up well if tested in court.
SPACs raise money without having any commercial operations or businesses and try to use the cash to buy something that already exists. But according to a recent study, investors who bought SPACs that merged with private companies since 2015 experienced an average loss of 37% in the year after the merger. SPAC and New Issue ETF SPCX
decreased by 12% this year. The frenzy for SPACs predictably went bankrupt. But if you see one, stay away.
– Nathan Vardy
There are two main reasons not to invest in cryptocurrency in 2023, and neither of them has anything to do with the sharp drop in value of most major coins over the past year, including but not limited to bitcoin BTCUSD.,
and close USDTUSD.
Investors have long been conditioned to buy the bottom and find value where others fear to tread, and then cash in on the upside.
Crypto is different because it has nothing to do with long-standing market theories, and buying it is more of a speculation than an investment. It may seem semantic, but if you look at financial planning holistically, then you are treating investing as an exercise in risk tolerance – and cryptocurrency is all about risk.
This leads to another major reason to avoid cryptocurrency in the next year: If you buy it, there’s really no safe way to store it. There is no federal insurance that covers exchange failures and small cyber theft protection for individuals. This leaves you on your own, which is not a good place to be with your money.
– Beth Pinsker
Meta Quest headphones
On the consumer front, if you’re really into virtual reality, Meta Platforms Inc. No problem switching to the new 2022 Meta Quest two and Meta Quest Pro headphones from META..
The problem is, you might end up feeling like you bought a BlackBerry BB
Early 2007 phone. Apple Inc. AAPL
Finally, engineers at the Silicon Valley giant will show off what they’ve been up to in a years-long project to move into augmented and virtual reality, and consumers are expected to at least get a glimpse of Apple’s effort this year. the ability to buy everything the company produces.
The headsets don’t come cheap: Meta said earlier this year that it raised the price of its Meta Quest 2 headsets by $100 to $399.99 (128GB) and $499.99 (256GB). The introduction of the iPhone 15 years ago changed the way people looked at smartphones, and Apple’s expected leap into the field in 2023 could leave anyone splurging on Meta Quest headphones dreaming of a new reality.
– Jeremy Owens
Companies that are struggling, some with moribund and/or struggling business models, generally don’t do well in the stock market. But during the pandemic, the shares of these companies often rose. What drove them was social media sentiment, driven by many retail investors on platforms like Reddit.
Video game retailer GameStop had GME,
movie theater chain AMC AMC,
and smartphone dinosaur Blackberry. AMC recently announced another $110 million in stock sales, adding to its total since the theater chain was swept into meme-stock frenzy past $2 billion. CEO Adam Aron He wrote on Twitter The move put the company in a “stronger cash position.”
GameStop recently reported its seventh consecutive quarterly loss and reiterated its goal of returning to profitability in the near term, but analysts said there are many challenges ahead. During the company’s recent third-quarter conference call, Chief Executive Officer Matt Furlong said he would be open to exploring acquisitions of GameStop’s strategic assets or free-to-play businesses if they were available in the “right price range.”
Buying meme companies like this has worked for some in a stock market that has been soaring with ultra-low interest rates. But we are now in a bear market with rising interest rates. Corporate basics are back in fashion. So are weird investment ideas like cash flow. The days of buying meme stocks are probably over.
– Nathan Vardy
In recent years, Tesla Inc. TSLA
it stood alone as the top choice for electric cars while other manufacturers struggled to get their production off the ground. But in 2023, more varieties of electric vehicles should be available, with prices expected to trend downward as the year goes on. Tesla prices range from $46,990 for the Tesla Model 3 to $138,880 for the Tesla Model X Plaid.
General Motors Co. With major manufacturers like GM,
Ford Motor Co. FORD,
Toyota Corp. and Volkswagen XE:VOW
competes and Rivian Automotive Inc. Young Tesla enthusiasts like RIVN,
Lucid Group Inc. LCID
and FISker Inc. FSR
Consumers will have more options for electric vehicles as the car is expected to begin production.
Meanwhile, Tesla has done little to update the Model 3 since it was introduced in 2017, raising prices at a level that Chief Executive Elon Musk admitted was “embarrassing” for a company that claims its target is mass-market pricing. For home.
According to Liz Najman, climatologist and communications and research manager at Recurrent Auto, an EV research and analytics firm focused on the used car market, the average price of a new electric car is $64,249, and a new gas car is $48,281. . After years of not having many options for electric cars outside of Tesla, 2023 looks like a turning point.
– Jeremy Owens