Is 2023 a good year to start investing?
What is happening in the world?
The past few years have been uncertain in the financial markets, starting with COVID-19, war in Ukraine, which led to disruption of supply chains and an increase in energy prices and inflation, which in turn led to rising interest rates.
The repercussions of these events have echoed through the world and have been felt by nearly everyone on this planet.
How does this affect the economy?
It is no secret that all the events mentioned above had a devastating effect on the world economy. COVID caused lockdowns, which affected small businesses in the worst possible way. The war in Ukraine has caused an energy crisis in UK and Europe, which resulted in high energy prices. Inflation is another issue which is tackled by rising interest rates.
Rising interest rates are a necessary evil to contain inflation, however this measure may lead to less demand in mortgages, which may cause property prices to drop sharply, considering how high they have climbed in the past decade and are believed to be in a bubble by many analysts hedge fund managers.
Should we be worried?
The worst thing anyone can do is panic when things get a bit uncertain.
In our history, there have been a number of events that caused economies to slow down, some of which had more severe consequences than what we are witnessing now and every time the economy has not only recovered, but came out stronger and brought plenty new opportunities to the market for growth. Is this time going to be different? – Very unlikely.
If you pay close attention you will notice that economy grows in cycles, which usually last 10-15 years. It is then followed by a major event which causes a market correction, a recession possibly even, but then slowly but surely ventures on the path of recovery.
The graph below represents this process:
As you can see, market drops are not new phenomena and have happened in passed. Each contraction (drop) was followed by a recovery and a period of expansion (growth).
History repeats itself. You don’t need to be a financial expert to see the patterns and take advantage of them.
This current cycle aligns perfectly with Bitcoin adoption cycles, which is a 4-year period and starts after next Bitcoin halving. If you have been following Bitcoin price and have done your research, you will notice that Bitcoin has a period of massive growth after each halving followed by a slow correction that lasts 2-3 years. The next halving is happening in 2024.
The graph below explains it:
From this graph it is clear we are close to the bottom and it is only a matter of time before Bitcoin sets a new all-time high.
Current situation is such that the timing on the economic cycle and Bitcoin cycles have aligned perfectly, which opens great opportunity to profit.
Inflation
While most people are aware of the risks of investing, fewer are willing to consider the risks of not investing. Cash interest rates are still low despite repeated interest rate rises by the Bank of England since late 2021. Inflation also now stands at over 11%. This means that if your money doesn’t grow in value, it will be worth far less in a year or so. Your investments may not be able to provide you with the lifestyle you require if they don’t at least keep pace with inflation.
Inflation is caused by rising prices, which in turn is caused by higher costs of materials, transport, wages and other operational costs. It can also be caused by higher demand for goods and services. As restrictions ease, demand is likely to increase, at least in some sectors. Businesses will need to comply with social distancing and safety requirements and may face extra logistical or operational costs. These costs will need to be passed on to customers.
Inflation is a certainty, and investing now provides the best chance of your money retaining its value.
The Best Time Is Always Now
2023 is a great time to start investing. But so was 2022. The key point is that over the long term, investments generally do grow in value, even if there is some early volatility. It is far better to invest now, whenever now happens to be, rather than waiting for some ideal future opportunity.
Two most important requirements every trader needs to satisfy in order to make a profit is to get a good value and get in at the right time and based on current market outlook – this year is the best time to start accumulating at discount prices and prepare for growth!
Please don’t hesitate to contact a member of the team if you would like to find out more about your investment options.
By Frank J. Larsen