Kevin O'Leary Says He's 'Amazed by This Economy' -- and He Thinks This Investment Is Poised for a Comeback in 2023
By Lyle Daly,2023-03-15
It's hard to know what to expect as an investor in 2023. Last year was one of the worst in recent history, with inflation and a bear market hitting portfolios hard. For 2023, there are still worries of a recession , and Morgan Stanley is warning that the stock market could fall by 26%.
One big name who doesn't share those worries is Kevin O'Leary. He thinks that stocks are going to do well in 2023. He said in an interview with Fox Business , "We've already had many high-flying stocks correct. I'm amazed by this economy." Here's why he isn't buying the doom and gloom, and if you should invest in stocks right now.
Why Kevin O'Leary likes stocks in 2023
O'Leary thinks there's a possibility that the economy could have a soft landing, where it avoids a recession entirely. If so, he says that could mean "an 8% return, probably 6% in capital appreciation and 2% dividend yields this year."
The Shark Tank star gave several reasons why he's optimistic about the economy and the stock market:
- Consumer spending is still strong even with high inflation. Retail sales and consumer spending reports both beat expectations in January.
- Employment numbers are also strong, with the unemployment rate hitting its lowest point in 54 years.
- Large companies went to a direct-to-consumer model , which has much higher margins, coming out of the pandemic.
O'Leary also bases his opinion on the results he's seeing with his portfolio of 54 private companies. He says those companies are "just killing it. We haven't seen the slowdown yet."
While O'Leary used to have a 60:40 portfolio (60% stocks to 40% bonds), he has since shifted that to 70:30. In particular, he likes healthcare and energy stocks .
Should you invest in stocks right now?
There's no sure way of knowing what's going to happen with the economy or the stock market in 2023. O'Leary makes some good points, but inflation remains high. It's still possible that we have a recession instead of a soft landing.
However, regardless of what happens over the next year, stocks are a good long-term investment. There have been plenty of recessions, and the stock market has bounced back from each one.
That means if you're already investing in stocks, continue to do that. If you aren't already, it's always a good time to start. Here are a few of the best ways to invest in stocks:
- Exchange-traded funds (ETFs) : These pool investor money and put it in a large basket of stocks. The best ETFs have low fees and diverse holdings, with S&P 500 index funds being a popular choice.
- Target-date funds : Each target-date fund has a specific retirement year, and asset allocation is based around that year. This means you don't need to worry about having the right mix of stocks and bonds, because your target-date fund does that for you.
- Stock picking : Some investors prefer building their own portfolios. A portfolio of at least 25 companies is recommended.
There are a couple of things not to do during a volatile market. Don't try to time the market; it's almost impossible to do this with any degree of accuracy. If you jump in and out of the market, you're much more likely to lose money.
Also, don't sell or stop investing because you're worried about market volatility. Even if the naysayers are right and the market falls in the coming months, don't panic. The worst thing you can do is sell low when that happens. Continue your normal investing strategy, weather the storm, and your investments will likely recover in the long term.
Hopefully, O'Leary is right with his expectations for the stock market. Whether he's correct or not, stocks are a fantastic way to build wealth over long time periods, so they're worth having in your portfolio.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy .