Will the slump in US stocks continue in 2023? Future uncertainty as seen from the November FOMC and strategies funded investors should take

The FOMC (US Monetary Policy Meeting), which the whole world is paying attention to, was held before dawn on 11/3 Japan time, and it was announced that interest rate hikes in November will also be 0.75%, continuing from the previous one.
This time, too, interest rate hikes of 0.75% were as expected by the market, and there was no sense of surprise in the interest rate increase itself.
What was attracting attention in the FOMC this time is “how will future interest rate hikes be mentioned.”
Consider interest rate hikes that have been made in the past
It will take time for the effects of the 0.75% interest rate hike that has been made 4 times in a row to come out
While watching the situation, we will consider future interest rate hikes
Since a statement to that effect was issued, there was speculation that interest rate hikes at the FOMC in December would shrink.
Stock prices rose when this statement was announced, and the market was enveloped in an optimistic mood, but the trend completely changed with Federal Reserve Chairman Powell's press conference held after that.

In other words, where the view that interest rate hikes would be stopped early next year was mainstream, on the other hand, it became feared that interest rate hikes would continue to be carried out during the next year, and stock prices reversed and plummeted.
There was intense volatility (price range) throughout the day, and at the end of the day, the S&P 500 depreciated 2.5%, and the NASDAQ, which is centered on high-tech stocks, fell sharply by 3.4%.
How will stock prices move if interest rates continue to be raised in 2023, and what strategies should investors take in response to that?

Interest rate hikes (rising interest rates) will be a headwind for stock prices.
In Chimata, the focus tends to be on “interest rate increases,” but what is important is “how long will high interest rates continue.”
As interest rates rise, debt interest rates will of course also rise.
From a company's point of view,
It became difficult to make new investments,
Also, since interest payments on loans will also increase, it will cause profit pressure.
The longer this period continues, the more it will have a negative impact on corporate performance, and it will be difficult to avoid that adverse effect on stock prices.
Also, when interest rates are high, the trend of stock investment → bond investment also becomes more intense.
If interest such as 4% or 5% can be obtained by investing in highly stable bonds, there is no need to dare to invest in stocks with high risk (price movements).
It is natural to think that it is more cost-effective to earn an annual interest rate of about 5% on bonds with stable price movements rather than investing in stocks, taking big risks and obtaining yields such as 5% or 6%.
In any case, it can be said that stock prices are not happy that high interest rates continue for a long time.

Similar to this year, the market price will continue to be soft in 2023, and there is a large probability that a full-scale rise in US stocks will be left behind.
However, for funded investors, on the contrary, it may be a good story.
This is because it means that the perfect preparation period will last for a long time.
The basic strategy for stocks is to “buy low and sell high.”
By buying as much as possible when it's cheap, you can make a big profit from the subsequent rise.
However, I can't stand that my assets don't increase as I thought
Wouldn't assets increase if you start (resume) investing after interest rate cuts have started
I think there are also concerns and questions like that.
However, I would like you to avoid the option of quitting your investment because stock prices are weak.
The history of US stocks so far is that if it continues, the timing of an increase will come someday.
However, it's almost impossible to guess when that timing is.
As a matter of fact, it does not mean that stock prices will rise after interest rates fall, and there is a high possibility that stock prices will rise ahead of time when there are many views that interest rate cuts will be carried out in the future.
Interest rate movements do not match stock price movements.
That's why it's so difficult to read movements.
The minimum we funded investors should do is

That's it.

What is important for funded investors is to simply honestly continue to accumulate funds regardless of the period when stock prices are sluggish.
No one knows how long this sluggish period will last.
There is a great possibility that the slump will continue in 2024 and 2025.
Keep saving no matter how the market moves.
This translates into huge profits in the future.
Also in order to continue saving
“Are you investing in reliable funds with surplus funds?”
Please check this again.

Artist: Hikaru Tomioka (FP Technician Level 2, Securities Foreign Officer Type 1)

Last updated: November 8, 2022