Investors can look forward to a much more positive 2023 after leaving behind a distressing 2022, according to multiple experts.
Fidelity International investment director Tom Stevenson said in the UK's The Telegraph that with shares, bonds, cryptocurrencies and gold all failing, this year "cash has been the only safe harbour".
"I think 2023 could be very different and I expect to look back in 12 months' time on a much more satisfactory year in the markets."
DeVere Group chief executive Nigel Green agreed.
"After an astonishing bull run of 13 years, financial markets went into bear territory in 2022 amid increasing global volatility, creating a pretty grim environment," he said.
"However, the landscape is already looking brighter for the year ahead."
4 reasons why 2023 will see better investment returns
Green named four forces that would "excite" global financial markets in the new year.
The first tailwind will be inflation passing its peak.
"As inflation begins a return to target, the cost of living will drop for consumers and central banks will ease their feet off the economic brakes, going easier on interest rate hikes before winding down."
Once that happens, investors will be happy to dive in because of the second force — discounted asset valuations.
"Market volatility has lowered valuations of some high-quality equities, which can create better long-term investment opportunities and generate higher income for investors," said Green.
"In many cases, they will be currently viewing this backdrop as a buying opportunity to top-up their portfolios."
The third tailwind is the continuing digitisation of business.
"This will help increase efficiency, increase productivity, lower operational costs, improve customer experience, improve competitive advantage, and improve speed and outcomes of decision making."
Finally, a weakening US dollar would help pretty much every country.
According to Green, the greenback had been pumped up in 2022 from investors looking for a safe haven during troubled times. The US Federal Reserve's steep interest rate rises has also made the US dollar more attractive.
"This has negatively impacted both developed and emerging markets globally, fuelling inflation and raising the cost of imported goods. It has also added to the need for some central banks around the world to tighten their own financial conditions," he said.
"But we expect the dollar strength to peak in mid-2023."
Don't get investment sentiment mixed up with the actual economy
Stevenson predicted that in 12 months' time sentiment will have shifted considerably from now.
"By the end of next year, stock markets will be looking through the ongoing recession to better times ahead," he said.
"And bonds will have responded to falling interest rates as central banks shift their attention from overcoming inflation to supporting the economy."
The paradox is that the global economy is likely to remain pretty gloomy throughout 2023, especially in Europe and the US. But Stevenson reminded investors that shares and bonds are all forward-looking.
"I expect to see positive returns from both bonds and shares next year, which may surprise an observer focused on the economic headlines," he said.
"Holding a balanced and diversified portfolio throughout remains sensible."
Green urged investors to snap up bargains now to hop on the ride.
"We expect some key market, macro and policy shifts that will provide a significantly more positive outlook for investors in 2023."
