Indeed, inflation is a formidable beast to fight. This fight is poised to drag into the new year. Even with two straight cooler-than-expected consumer price index reports, it seems like investors have already moved beyond inflation and its impact on the world economy. At this juncture, it’s all about how much economic damage it will take before the Fed has to reverse course with either a pause or a handful of cuts.
Undoubtedly, some pundits, like economist Jeremy Siegel, think rate cuts are a possibility in the new year, as the Fed realizes it overshot in its battle with high inflation. Such cuts would help markets escape their current funk. Even without cuts, I think the economy is on stable enough ground to be constructive in the new year.
Beating the bear market doesn’t have to be hard in 2023
As this bear market enters old age, Canadian investors should stay contrarian and nibble away at shares of cheap firms when they can. January 2023 will see the TFSA contribution limit be raised to $6,500 from $6,000. Arguably, this top-up season is a great time for investors to go bargain hunting on the TSX Index, perhaps shortly after Santa Claus leaves a lump of coal for investors, capping off one of the ugliest years for investors in a very long time.
Some of the best years tend to follow some of the ugliest. The 2023 recession may already be priced in before the clock strikes midnight on the last day of the month. It’s hard to tell. Still, investors should do their best to drown out the day-to-day noise and focus on building wealth over the next five, 10, or even 25 years. It’s within our power to hand-pick wonderful companies that’ll appreciate over the long run. The day-to-day, market-moving chatter is out of our control. And oftentimes, it’s nothing more than a chance to exercise our abilities to behave like a contrarian. It’s not easy.
Contrarian investing in bear markets entails a high tolerance for pain and the ability to put in extra due diligence to gain a better gauge of the risk/reward tradeoff to be had. Be mindful of the downside risks and remember the time horizon you’re investing for.
Restaurant Brands International
Restaurant Brands International (TSX: QSR) stock could be a leader in the new year, as one of its newest (and most respected) employees, Patrick Doyle, gets to work. Doyle is a known turnaround artist that knows the fast-food industry better than most.
Though Burger King hasn’t been a major laggard, investors would agree that the firm could use a bit of expertise from an industry legend. In recent years, competition has grown fierce, and Burger King just hasn’t been able to deliver the kind of beefy gains we’d come to expect from a fast-food juggernaut.
I think Doyle will work wonders for Burger King and QSR. In 2023, we’ll see how his changes translate as recession woes surge. It’s no mystery why QSR stock rose when Doyle was hired. He’s a hire worth getting excited about.
Jamieson Wellness
Jamieson Wellness (TSX: JWEL) may lack the catalysts that QSR has. As I mentioned in prior pieces, though, the company has an opportunity to grow its presence at the international level. Only time will tell if Jamieson can be a hit in markets such as China as it was in Canada. With such a focus on quality and branding, I believe Jamieson is a stealthy, mid-cap growth play that many investors are sleeping on.
There’s a recession on the horizon, but with a 0.36 beta, Jamieson stock will be a relatively smoother ride than your average TSX stock.
