Changes for 2023

Changes for 2023

Yesterday I was listening to an interview between Pranay Roy and Ruchir Sharma.
Ruchi Sharma makes certain forecasts for the following year on NDTV and more often than not the forecast are quite in line. His forecasts range from the world macro economics situation to even the most micro one's.
Two of the main forecast out of 10 which he has made for 2023 have taken up my interest and it is my duty to inform all of you.
First and not so important as second one is the emergence of Japan back as a developed nation with their profit margins rising almost twice in a decade.
The second and most important which concerns all of us is the forecast of the US market going down.
According to him the u.S market follows a pattern of decade. Which means for one decade the economy will grow  and another decade it will remain down. He forecasts the US economy to go down for a decade at least, starting 2022.
If we include another of his forecast which says that the virtual industry economy will lag behind the old and traditional economy (meaning the IT and the metaverse will lag behind the traditional business of manufacturing etc.) then it is obvious that in future the US economy will follow the same pattern as of 2022 which means going down.
Rightly so the market cap of US is at all time high of 60% instead of 45 to 50% which it has been for the past century. So following the law of Reversal to the mean, we could expect us economy to continuously move less aggressively than before.
In the light of this statement we must re analyse our investment in International Funds which are largely in the US market by default. However we should not take any action in a hurry or panic.
Members on this group have been investing into International Funds largely in 2 funds i.e. Nasdaq which is the index for mostly technology stocks and snp 500 which covers the top 500 non tech stocks of the USA economy.
I have observed a certain uptick in these funds in the last 3 months, but whether this is short term or a reversal of trend I cannot say because I am not qualified to read the macro or micro situation of US.
All I can suggest to members who are retired and cannot see their Fund value going down from what it is may just stop further investment and if they feel they can gradually redeem their holding.
The youngsters who have just started investing can either ignore the American market for the time being and start investing later or outlay a minimum amount to the American sector. In any case we were always cautious to say that restrict your exposure to International Funds to a maximum of 10%.
Those who have keener interest may look out for the talks on this topic and interviews with commentators on American economy( not stock brokers).
I personally have been entering and exiting the US funds regularly because of various reasons. However going forward I will be investing in the US market in small amounts even if it is for 10 years  of non performance and beyond.
What other members can do is track other foreign funds which have a strong Asian focus.
But as I have been already saying that exposure to International fund maybe considered by only those members who have already accumulated a large amount of Corpus and have started understanding the way of working of the equity market.
Till then funds like Parag Parikh Flexi cap and SBI focused equity are sufficient to keep your small exposure to foreign equity.
I am sharing the link for the above interview between Dr  Prannoy Roy and Ruchir Sharma separately.

© Rajeeve Kaushik