As optimistic as I am about being able to successfully invest in 2023, I do want to share with you a stat that I just came across after performing a screen.
There’s around 1000 companies still trading over a dollar losing over $20 million a quarter. For example, staffing company Shiftpixy, Inc. (NASDAQ:PIXY) is selling at around $16, has a market cap of $147 million and lost close to $40 million, per their annual report they recently filed! It is just mind-boggling that even after the correction we’ve been through, companies like this are still alive and kicking.
STARRY GROUP HOLDINGS INC (OTC:STRY) Is one of a long list of Special Purpose Acquisition Corporations (SPACs) that failed to deliver. The company is a telecom infrastructure play that is losing over $50 million a quarter and was selling at around $3.50 on August 22 (half a billion market cap) when I bought put options on the stock. Yes, you heard that right, over $50 million in losses per quarter!! With the company on the verge of bankruptcy, shares are now trading at 4 cents.
So, even though we have faith that the great companies will outperform in 2023, there will still be pain in the market for weak companies that are on life-support that still haven’t fully corrected.
Regardless, we’re still optimistic about the future. To reiterate our sentiment on certainties that we stated in out last Saturday Update:
“There are only two sure things in life: Death and Taxes.” Well, we need to add two more certainties: Stock market corrections happen and the market always recovers.
…and we believe that the companies that we highlight at GeoInvesting will reap the rewards precipitated by this recovery. We are excited to see their business fundamentals continue to grow, while we tune out the noise.
Now, think of 2023 as a time where cooler heads will prevail. Losses have been booked, tax loss selling is done and now investors are ready to deploy cash again.
Let’s be honest with ourselves and put everything in perspective for one second. Sure, we are going into an environment where the Fed is increasing interest rates.
However, even if the Fed raises its rates to its target range of a little more than 5%, it’s likely there will be ample investor appetite from those who are looking to achieve a much higher return than in money markets, savings accounts or bonds that may get you a little more than 5%.
And we think one thing is for certain – investors will flock to smaller cap stocks because that’s where you get the highest returns over time. So, if you’re going to take a risk in this market, take it in the area of the market that compensates you for taking that risk. It’s the right time to reiterate the facts that show that smaller cap stocks beat large cap stocks over the long run.
Our job as investors is to learn from the past and readjust our portfolios for the future. The current correction has created tremendous value investing opportunities that we believe should begin to catalyze over the next several months.
In anticipation of next week’s GeoWire highlighting GeoInvesting’s performance during the last bull market, our Studs and Duds of 2022 and what 2023 has in store for us, we wanted to continue to offer you our New Year’s Special with coupon code 42OFF, the link for which is below offering your a 42% discount to our annual rate or $599.99, so that you can join us in 2023 with access to all of our Premium Content:
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