Market strategist David Rosenberg suggests 2023 may be the year to buy stocks, after the market has dropped another 30% per his prediction.
The former chief North American economist at Merrill Lynch says “the recession’s just starting”, stating the S&P 500 may bottom out around 2900, to which at that point stocks will look attractive again.
Rosenberg is forecasting a bullish market in 2024, which suggests 2023 will be the year to buy and bulk up to build stronger portfolios.
While investors may try to time the bottom, even Rosenberg’s prediction is just that, a prediction.
The market may still drop as the fed continues to regulate and assess interest rate hikes, but how low the market may drop is still uncertain.
Short sellers lost more than $81 billion in only the first month of the new year due to 2023’s rallies.
The SPY is up more than +7% this year-to-date with many popular stocks having much larger gains this first quarter.
- AMC Entertainment Holdings Inc. (NYSE:AMC) +76.46%
- AMC Preferred Equity (NYSE:APE) +165%
- Tesla Inc. (NASDAQ:TSLA) +79.54%
- GameStop (NYSE:GME) +38%
- Disney (NYSE:DIS) +23.30%
So, although the start to this year has been rather bullish, Market Strategist David Rosenberg says he doesn’t believe the bottom is in yet.
Is Wall Street out of touch?
Rosenberg says investor sentiment is out of line.
“There is a disconnect between how investors feel about the outlook and how they’re actually positioned.
They feel bearish but they’re still positioned bullishly, and that is a classic case of cognitive dissonance.
We also have a situation where there is a lot of talk about recession and about how this is the most widely expected recession of all time, and yet the analyst community is still expecting corporate earnings growth to be positive in 2023.”
Goldman Sachs says bigger short squeezes are coming since the meme stock frenzy in 2021.
Goldman Sachs (NYSE:GS) is reporting hedge funds betting against stocks globally abandoned those short positions last week at the fastest pace since 2015, surpassing the speed of exits during the ‘meme stock’ frenzy in 2021.
According to the Goldman note, the speed at which hedge funds exited bearish positions surpassed that seen in January 2021 when retail traders managed to squeeze short sellers out of stocks such as videogame retailer Gamestop (NYSE:GME) and movie theatre operator AMC Entertainment Holdings (NYSE:AMC).
During the ‘meme stock’ frenzy in 2021, GameStop shares rose to nearly $500 per share, or +1,500% that year.
AMC shares rose from $2 early that year to an all-time high of $72 per share, more than +3,000%.
Today, both AMC and GameStop remain heavily shorted with AMC Entertainment having a higher-than-ever cost to borrow fee.
Is the stock market crash over?
While the stock market has performed relatively well going into 2023, Market Strategist David Rosenberg believes the S&P 500 has not bottomed out yet.
Rosenberg predicts 2024 will be a bullish year for the market which suggests buying the 2023 dip could prove to yield gains next year.
Stocks fell all throughout 2022 but have begun to bounce back in 2023; will 2023 see gains and consolidation?
I’m curious to hear your thoughts on this.
Feel welcome to leave a comment down below.
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