Well, it's a new year for investing, and the share market is lapping it up. Since the start of 2023, the S&P/ASX 200 Index (ASX: XJO) has gained a pleasing 7.34%, which is pretty close to its average long-term return over a year.
So we are certainly off to the races this year thus far.
Here at the Fool, we like to be eternal optimists when it comes to shares. Our own chief investment officer Scott Phillips recently spoke to Gemma Dale for NABtrade's 'Your Wealth' podcast. Scott was asked what he's excited about in 2023, so let's see what he served up.
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1) Another year of compounding our wealth
Scott loves the compounding effects that the share market can bring patient investors. Here's some of what he said about 2023 and what it can bring to long-term shareowners:
You know I'm a massive fan of the Vanguard Index chart… a spectacularly good 30-year chart that Vanguard produce. Over the last 30 years to 30 June 2022, the market had turned $10 grand into $130 grand.
And so honestly, the thing I am most excited about is also the most boring thing, which is, this year will be one of the [next] 30 years. Investing [going forward] for the long term will be astonishingly successful and value-creating, in my opinion…
Part of it is not being too short term in your view (and one year is a short-term view). So I'm excited for people to continue to add money regularly to their investment accounts, diversify properly, invest intelligently, reinvest their dividends… all those things we know we should do.
2) A return to 'normal' ASX share investing
The last few years have seen some (frankly) crazy trends, fads, and occurrences in the world of investing. Near-zero interest rates, unprecedented government stimulus, and a pandemic have all upended financial markets.
This has resulted in crazes such as the 'meme stock' frenzy and the cryptocurrency and NFT mania. And who could forget the GameStop Corp (NYSE: GME) saga, where retail investors banded together to short a shorter?
But Scott is looking forward to things returning to 'normal' in 2023:
I'm excited that investing might become a bit more normal. The way I was taught to invest was simple, thoughtful business analysis, and paying the right price for that business.
Since the outbreak of COVID (and perhaps a little bit before that)… growth has been in the ascendency almost permanently. And that's happened largely because the circumstances have been so unusual… It's kind of distorted markets a little bit.
But if you look at 2023, we've got some inflation, we've got higher (or 'normal') interest rates, and business fundamentals matter again…
I think we'll end up in more normal times, and I think that's really good thing for most investors who want to put the time in.
3) The cheap ASX shares still out there
Even though the share market has been on a tear in recent months, Scott still reckons there are pockets of value that are well worth exploring right now. Here's an excerpt on which rocks he's looking under in the new year:
At the beginning of 2023, I'm looking around at some of these bombed-out share prices, and saying hey, some have bombed out for very good reasons… but one area I really like now is retail... The prices of some of these businesses are way too low, given their long-term potential…
JB Hi-Fi Ltd (ASX: JBH) is a great example. At [its recent prices], even if we have a recession, even if JB's profits fall by 20% this year but come back and grow from there, I don't see a scenario where they are at least the level they are now, and probably a lot higher in five, or seven or ten years' time.
