Year In Review 2023

The year has been characterized by great turbulence on the Swedish stock market. Concerns about inflation and raised market interest rates dampened the mood. The stock market bottomed out at the end of October. After signals from the FED that they will now begin to lower the key interest rate, this led to strong gains in the stock markets. The large-cap index (OMXS30) has risen by +17% this year, while the broad index rose by +13%.

After a weak 2022 where Nasdaq fell by -35%, the index has risen sharply this year by +44%. It was especially the so-called 'Magnificent Seven' companies, including Apple, Microsoft, and Nvidia, that led the surge. These contributed to the S&P500 rising by +24%. The hype around AI has been strong, and a concern now is how the future business models will be developed. Much is priced in for strong growth.

Even though the Swedish stock market is up this year, many stocks have had a disastrous development. Viaplay stood out with the year's belly flop, falling by -96%. Other disappointments were SAS -93% and Hexatronic -81%. Among the winning stocks, retail companies Clas Ohlson rose by +119% and H&M by +57%. Somewhat unexpectedly. The heavy industrial companies rose more than the index, including Atlas Copco and Volvo, each increasing by about 40%.

Now, looking into 2024, it can be noted that the market has priced in several cuts from the FED. Nearly 7 compared to the FED's forecast of 3. It feels like the market has overreacted here. As for Sweden, the consensus is that profits will come down in 2024, and the market sees an ongoing risk of recession. However, the stock market is always ahead by about 6–9 months. So, even if things get worse, it doesn't necessarily mean lower prices. A lesson from 2023, however, is that the market's patience with underperformers is short, which can lead to sharp price drops.

My forecast for 2024, as I already wrote in the 2022 annual chronicle, is: 'I believe in a gradual rise in the stock market in 2023'. The most important parameter will be the interest rate-inflation development. There should be an increased focus on small-cap companies, which have performed much worse than large-cap companies. Then I say as all central bank governors have said: the krona should strengthen.

The late Charlie Munger, who was a giant in management, said this about stocks:

”It's not supposed to be easy. Anyone who finds it easy is stupid.”