Back to a bull market – expert analyst’s predictions for the rest of 2023
We're in the middle of a bull market. But what does that mean for everyday investors? Josh Gilbert of eToro shares his insights.
Halfway through 2023, it seems that the US has shaken off the bear and found itself back in a bull market.
A bull market is generally characterised by a rise in asset prices over an extended period – usually a few months. It also tends to be associated with investor confidence.
From an investor perspective, some trepidation about buying during a market high is understandable. But broadly, a bull market tends to raise confidence about larger returns over the long term.
We spoke to Josh Gilbert, market analyst at eToro, to get his insights into how investors can best benefit during a bull market.
How investors can leverage a bull market
Gilbert sees diversification as one of the key ways that investors can benefit during a bull market. Branching out and looking for ways to offset risks in one area of the portfolio is key.
"Diversification has been really prominent during 2023," he says. "European and US stock market performance shows why it is important to invest globally, not just locally. Time in the market outweighs timing the market."
Tools like eToro's demo account also serve as a means for looking at new ways to diversify, too.
It's a way to test out strategies before you put them into practice. This way, you can look at the market data and refine your plan without putting your money at risk.
Options like eToro Smart Portfolios and the AussieEconomy portfolio also provide investors with a way to start diversifying, via a curated selection of stocks and assets.
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Asset classes to watch in the second half of 2023
With diversification in mind, where should investors be looking for the rest of the year?
Gilbert points to a number of different sectors.
"Tech is in a position to keep performing on the basis that inflation keeps falling and interest rates are cut," he says. "High-profit margins and fortress balance sheets make big tech defensive to slowdown risks."
Consumer staples and utilities are also attractive. They offer defensive cash flows, are less exposed to rising economic growth risks and feature robust dividends.
However, Gilbert notes healthcare as one of the most encouraging options.
"We're seeing cheaper valuations, more growth and some rising cost protection," he says.
Gilbert sees AI stocks as an important example of how investors can prioritise long-term industry trends over short-term investment decisions.
"Thematic investing is also likely to be important," he says. "AI stocks have seen considerable growth in the last 6 months or so."
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"Identifying major developments and identifying the stocks that stand to gain the most from them is one of the keys to investing success," Gilbert says.
Ensuring that you have the right tools in place is critical for this process.
Many trading platforms offer educational resources to help you develop as a trader and make more informed decisions.
For example, eToro offers a range of different informational and educational tools, such as eToro Academy.
By experimenting with new strategies, keeping up to date with market developments and adjusting your investment plan as necessary, you'll be able to stay in the loop.
How long can the bull market be expected to last?
In 2023, the Nasdaq 100 index had one of the best starts to the year in its history, gaining over 35% in the first 6 months of the year.
But realistically, this can't last forever – so how does Gilbert see the second half of the year playing out?
He's hesitant to put hard dates in place, but he does note some important signs.
"Realistically, we're due a slowdown in the pace of this rally," he says. "Now that doesn't mean the rally is over – but it seems unlikely that there will be another 35% gain in the second half of the year."
The first half of the year, Gilbert notes, was driven by economic slowdown risks being pushed back, US GDP on track to grow by 2% and inflation falling fast in the US.
There will be bumps in the road, Gilbert notes. But he's certainly not dour about the wider outlook.
"The current environment is still well-placed for assets such as healthcare, big tech and traditional defensive assets," he says.
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