The Stock Market rally of Covid 2020 was a surprise, many investors smartly made lots of money and this has influenced many new investors to start investing in the Stock market.
But unfortunately, there are a lot of us who started investing at the end of 2021 or from the start of 2022 and have experienced the ups and downs of the market due to multiple reasons leaving our portfolios in red to worst.
As the Stock Market is cyclical and goes up and down, it makes it possible to look and study past trends and make predictions for future investments. On the other hand, you can’t always count on future returns to match past ones but these trends can help us understand and plan our investment better.
So I have been going through multiple research to understand how the market can behave in the year 2023 keeping in mind we are into recession and an election year is ahead of us.
First, we have been seeing the impact of the recession, because of rising inflation, there have been multiple rate hikes around the world so it will be great to see how the stock market has performed in past recession periods.
As you can see from the chart above, returns are negative more than 50% of the time before the recession and returns are positive more than 80% of the time after the recession which gives us good hope for 2023.
To support the above points, let's look at the below two points from the National Bureau of Economic Research (NBER) — is an American private nonprofit research organization
2. The average return one year after a 25% or more decline is far above average: Since 1960, there have been eight declines in the S&P 500 of 25% or more (the current decline would make it 9). One year later, the average return is nearly 23%.
Second, as we have elections in India as well as in the US you can also look at the performance of the stock market during an election year. So let's go through the numbers to know how 2023 will be for the stock market because of the elections.
Here are the market results for the S&P 500 for every election year since 1928. According to the 2021 Dimensional Funds report, the market has been favorable overall in 20 of the 24 election years from 1928 to 2020, only showing negative returns four times
Below are the Nifty market returns for the last 4 election years. The analysis of past general elections reveals that election years are good for the equity markets.
We hope to witness good stock market returns in India in the second half of 2023, followed by US markets (elections set for the end of the year 2024)!! Good luck with your investments! 🙂🙂🙂
BONUS, Interest rates are predicted to peak in India and the United States by the end of 2023, and history has shown that stock markets rally when interest rates peak and begin to fall 🤞(alert-passed)
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