Top 5 Strategies For Navigating The 2023 Market
Digging into the top 5 Sunday Investor strategies to navigate the volatile 2023 markets
Dear Sunday Investors:
Happy Sunday & welcome back to the 30th edition of the Sunday Investor! It has been a minute since the last edition, but I am excited to get writing again to showcase the top five investing resources below for ways on how we can all successfully navigate unique investing strategies in the 2023 market.
What Has Happened So Far in 2023
Inflation is easing, but is still elevated above market estimates (CNBC)
The Federal Reserve continues to raise interest rates (CNBC)
After falling 19.4% in 2022, the S&P 500 index is up 4.1% for the year so far (Reuters)
AI-fueled stock & crypto rallies ignite giant winners and losers in the market after ChatGPT (Bloomberg)
Bitcoin is up over 40% in 2023 with crypto market slowly rising back (Yahoo Finance)
Chinese Central bank injects liquidity into market igniting a mini-crypto bull run for numerous cryptocurrencies (BeInCrypto)
So what does this mean for a typical investor? Showcasing different ways below on how we can use the news above to expand our current investing strategies:
Interest Rates Rising = Earn More On Your Cash
As we saw above, as the Fed keeps increasing rates, and expects ongoing increases throughout the year, high yield savings accounts are actually becoming prevalent again.
For example, my Chase Bank account currently gives me 0.001% interest on cash generating virtually 0% and $0 in returns.
Wealthfront, a fin-tech bank, works with partner banks to provide a 4.05% APY rate, with no minimum investment, unlimited free transfers, and with $2M in FDIC insurance.
In the past six months, some money-market funds have offered an even better return. Money-market funds are a type of mutual fund that hold a mix of short-term corporate and municipal debt along with U.S. Treasury bills and other vehicles. Major brokerages such as Fidelity offer them, and they now pay above 4.20%. Money market funds are not FDIC insured, but are still seen as safe bets in the market when compared to stocks/crypto.
With minimal risk, money in a Wealthfront, Fidelity or competitor alternative substantially outplays any checking account interest rate, and should be on all investors radars in our high-interest rate market in 2023.
Passive Income ETF Investing
Passive income has been mentioned numerous times in previous articles, but lets take a step back and define what passive income is:
Passive income is income that requires minimal labor to earn and maintain.
Passive income is powerful as in theory, it requires minimal work, such as a landlord receiving rent payments every 1st of the month. When we transfer this theory to the stock market, below we will discuss the different ETF strategies on how passive income can be accomplished.
There are numerous ways to generate passive income in the stock market and we will focus on two of the most popular ways below:
Dividend Generating ETFs:
A dividend ETF is an exchange-traded fund (ETF) designed to invest in a basket of dividend-paying stocks. The fund manager will choose a portfolio of stocks, based on a dividend index, that pays out dividends to investors, thereby working as an income-investing strategy for individuals that purchase the ETF. (Investopedia)
Benefits: Portfolio diversification, guaranteed income, payouts may continue even when underlying stock company earnings are down.
Drawbacks: No guarantee of future dividends, underlying stock price declines could offset the dividend yield
Popular Dividend ETF Tickers: Invesco S&P 500 High Dividend Low Volatility ETF (SPHD), iShares Select Dividend ETF (DVY), iShares Core High Dividend ETF (HDV), iShares Core Dividend Growth ETF DGRO, Invesco S&P 500 Quality ETF (SPHQ),, SPDR S&P Dividend ETF (SDY).
Video linked here comparing their performance:
Covered Call ETFs:
A covered call ETF is a fund that purchases a selection of stocks and writes call options on them to boost investors' yield.
Investors can profit from covered calls by purchasing a covered call ETF, which allows them to participate indirectly in the options market. The covered calls are handled for them by the fund.
Benefits: Monthly guaranteed income, volatility protection,
Drawbacks: Upside potential is limited, returns dependent on volatility, limited downside protection
Popular Examples: GlobalX Nasdaq 100 Covered Call ETF (QYLD), JP Morgan JEPI ETF (JEPI), Amplify CWP DIVO ETF (DIVO), First Trust Dividend Aristocrats (KNG), Nationwide NUSI ETF, (NUSI), Nuveen NASDAQ 100 QQQX ETF (QQQX)
Video linked here comparing their performance:
Passive income investing does not come without risk, but leveraging some sort of passive income in investment portfolios has always been a key goal of mine, and is becoming even more important in uncertain market conditions such as 2023.
Using AI/Automating Your Investing:
Another craze I have seen seeing throughout the last few months, are retail investors like myself interested in automating their investing through a self-created trading bot, or through no-code platforms like composer.trade.
Lets go deeper into both options below:
Composer Trade No-Code Algo Trading:
Composer.Trade is an no-code algorithmic trading platform that allows retail investors to automate their trading strategies. I am experimenting with a few strategies of my own on this platform.
Benefits: Trades are made automatically, and you can track performance of each symphony (automated portfolio) individually, as well as your complete portfolio. You are also able to trade/follow pre-made symphonies or portfolios from other traders on their platform as well
Costs: Free membership for back-testing, creating portfolios in test mode. Live mode membership starts at $24/month
Building a Trading Bot With ChatGPT:
My interest in using ChatGPT to build a trading bot spun up after watching this YouTube video below:
This video goes into the instructions into depth, which if all else is a very interesting concept. I have been messing around with my own algorithmic trading bot paper-trading in test-mode, and it has been a super cool project and proponent for my belief that AI for investing will only continue to increase in the near future.
Using AI/Resources To Make Smarter Decisions
Using AI and platforms with extensive datasets that are not seen elsewhere also could potentially have major benefits for our future investing performances. Outlining two popular platforms I use below:
QuiverQuant:
The Quiver platform gives you real-time vision into the players and forces moving the stock market from behind the scenes.
Our mission is to bridge the information gap between retail investors and Wall Street by making next-generation stock data accessible to everyone. QuiverQuant also has an Instagram where they post extensive videos on inside information from politicians/insiders and others investments to help investors like us.
Cost: Free
Level Fields AI:
Level Fields is a investment platform that using AI and a vast data set to help you invest smarter based on historical returns/pattern recognition. Using artificial intelligence and natural language processing, the platform is able to:
Detect and categorize specific types of events that affect stock prices
Account for context and eliminate duplicates and false positives
Pinpoint dates, distinguishing between events that are rumored, planned, in the past, or in the moment
Layer on historical stock data to identify patterns and produce actionable investor scenarios
Cost: $19/month
Cryptocurrencies:
This wouldn’t be a Sunday Investor without cryptocurrencies somewhere in it, so inputting the best threads below on the top topics I am keeping my eye on in the crypto market below as well:
Yield Farming:
Thread below on the top current passive income strategies in the crypto market:
Ethereum L2 Chain Investments:
Thread below on protocols with high potential on Ethereum top Layer 2 chains Optimism and Arbitrum:
Top Twitter Threads of 2023
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