The biggest investing trends to bet on in 2023

2022 was the worst year for the stock market since the Great Recession. Even though we’re continuing to operate in uncertainty, there’s hope for investors seeking positive returns in 2023. 

Fortune’s Quarterly Investment Guide, released this morning, shows that there’s some light at the end of the tunnel for the markets, but you may have to reach it in unexpected ways. And the guide is chock full of surprising trends and hints at where the smart money is moving that will be of interest to anyone in finance.

“Where to invest in 2023: 5 surprising strategies for beating the indexes this year,” is a report by Shawn Tully that explores Research Affiliates’ forecasts on future returns. Chris Brightman, CEO of Research Affiliates (RA), told Tully that by almost any metric the stock market is now offering much better returns over inflation than at this time last year. 

One of Brightman’s surprising strategies? Don’t bet too much on bonds. “RA’s negative view on most bonds contradicts what the fixed income markets are saying,” Tully writes. “The best deals, Brightman says, are in Treasury Inflation-Protected Securities or TIPS.”

He told Tully: “The persistence of inflation that will likely be higher than the markets are predicting means government bonds aren’t a good place to be. But corporates are more attractive, and much more attractive than last year.” 

The U.K. is facing a “deeper and more prolonged recession” than any nation in the G7, according to a recent Financial Times survey of economists. Debt finance is highly unattractive to CFOs in the U.K. as they are bracing for a recession. And the EU grew GDP at an annual rate of just 0.6% in the first three quarters of 2022.

However, Brightman surprisingly ranks Europe as the world’s most promising market. “Companies are not countries,” he told Tully. “You might have higher GDP growth in the U.S. than in nations such as the Netherlands and Switzerland, but that doesn’t mean that Unilever or Royal Dutch Shell or Nestlé increase their earnings more slowly than comparable companies in the U.S. (You can read the complete report and more surprising strategies here.)

Speaking of corporations, the report, “The 11 best stocks to buy for 2023 as the market splits into a ‘tale of two halves’ according to Bank of America,” highlights some that are worthy of investment. 

Bank of America finds that Walmart “reigns in the in the consumer staples sector,” Lucy Brewster writes. “The high-quality stock has a favorable ESG rating from Bank of America and benefits from consumers who might be trading down if the economy worsens.”

Meanwhile, in the industrials sector, “Bank of America singled out aerospace technology producer Honeywell as a stock to buy due to its quality and ESG rating from Bank of America,” Brewster writes. “The company also benefits from automation and decarbonization trends.”

Fortune‘s finance team also reported on investing moves to kick off 2023, lessons from a terrible year in investing, the countries where the stock market is soaring and more. You can find the complete Quarterly Investment Guide here. 

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

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Big deal

“The state of responsible technology,” a new report by MIT Technology Review Insights, gauges how organizations understand the significance of responsible technology. The report found that 30% of respondents strongly agree and 43% somewhat agree that responsible technology considerations will eventually equal business or financial considerations in importance when organizations make decisions about technology use. Respondents said the top business benefits of adopting responsible technology are better customer acquisition/retention (47%), improved brand perception (46%), prevention of negative, unintended consequences and associated brand risk (44%), and attracting and retaining top talent (43%), and improving sustainability (43%). Produced in association with Thoughtworks, a global technology consultancy, the finding are based on a survey of 550 senior executives and interviews with technology experts from organizations including H&M Group, MOIA, and California Polytechnic State University.

Going deeper

The National Taxpayer Advocate’s newly released annual report to Congress details how taxpayers and tax professionals “experienced more misery in 2022,” resulting from paper processing delays and poor customer service. But the Internal Revenue Service is making progress. 2022 was a “frustrating year for tax professionals,” National Taxpayer Advocate Erin M. Collins said in a statement accompanying her annual report to Congress. “More than half of individual income tax returns are prepared by tax professionals, and many taxpayers rely on their preparers to address follow-up requests for information,” Collins said. “In 2022, we regularly heard complaints from tax professionals, and the organizations that represent them, about the difficulty of reaching an IRS employee on the Practitioner Priority Service telephone lines.” However, last year, the IRS also made “major strides in reducing its inventory backlogs and increased hiring in its customer service operations,” Collins said. She expects we will begin to see improvements in taxpayer service by the middle of 2023.

Leaderboard

Jean Hu was named EVP and CFO at Advanced Micro Devices Inc. (Nasdaq: AMD), effective Jan. 23. AMD is a semiconductor company that designs and develops graphics units, processors, and media solutions. Devinder Kumar, currently CFO and treasurer, is retiring from the company. Kumar will remain at AMD through April 2023 for a transition period. Hu joins AMD from Marvell, where she served as CFO since 2016. She has over 20 years of experience in financial leadership roles in semiconductor companies, including Qlogic and Conexant.

Michael McLaughlin was named EVP and CFO at Informatica (NYSE: INFA), an enterprise cloud data management company, effective Jan. 16. McLaughlin succeeds Eric Brown, who is stepping down from his role to pursue other opportunities. McLaughlin joins Informatica from FICO, where he has served as EVP and CFO since August 2019. Before FICO, McLaughlin spent 26 years in investment banking, advising leading technology, financial services, and real estate companies, most recently serving as managing director and head of technology corporate finance at Morgan Stanley.

Overheard

“Partners in our offices have had the privilege of not coming into the workplace and when we embarked on hybrid work last year, each of us made a promise to each other to be in the office between one to two days a week. From our badging data, it’s clear that a good number of SSC partners are not meeting their minimum promise of one day a week. This is why I am also announcing that this policy—three days in the SSC and regional offices—is a requirement.”

—Starbucks interim CEO Howard Schultz announced on Wednesday that employees living within commuting distance of its offices would have to go to work three days a week. The policy is to take effect on Jan. 30, Fortune reported. 

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