Investors should ensure their portfolios are diversified with a bias towards defensive stocks and cash holdings heading into the new year as the relief rally that swept global sharemarkets fades, according to Morningstar.P/ASX 200 has surged more than 12 per cent since the start of October, and now sits just 2.6 per cent below the level it started 2022. It will need to add 5.3 per cent to top a record high from August last year.
“Equity markets continue to ignore the magnitude of the problems likely to emerge in 2023,” he said. “The road to peak rates has lengthened as the size of the increases reduce, but it is hardly the time to rejoice and move the dial to risk-on.” Against this backdrop, Morningstar believes that growth stocks are going to come under pressure next year, and investors should look for businesses offering sustainable income such as healthcare and consumer staples.“I think 80 per cent of the total shareholder returns in 2023 will come from income and maybe 20 per cent from capital, so the free kick from capital gains is over,” Mr Warnes said.Morningstar listed Santos, Whitehaven Coal, AGL Energy and Aurizon among key picks for 2023.
With the global population pushing through the 8 billion mark, Morningstar sees Nufarm benefiting from the growing demand for reliable food supply through its crop protection products.
Peter Warnes is definitely worth listening too. Been reading his YMW reports for years and always had sound financial advice with uncanny timing.