Are there opportunities for value investors in 2023?

Andrew Williams, Investment Director – Equity Value at Schroders

The consumer sector looks ripe for the picking for value investors. We prefer stocks with stronger balance sheets that can be sustained in potentially tougher times ahead.

At this point last year, we wrote that the areas of the stock market where investors were most pessimistic were oil and gas, mining, and banking shares. During 2022 each of those sectors had a good year, although for reasons none of us would have been able to predict. We simply based our view on which sectors were most out of favour, which were cheapest, and therefore set to benefit the most if there was any alleviation of the negative headwinds those stocks had been facing. Last year, that worked out pretty well.

The most anticipated recession ever

Today, the most vexing issue for investors is the forthcoming consumer recession. It is rare for economists to forecast recessions; famously the Bank of England has never forecast a recession – until now. Today, however, forecasters in the US are as sure as they’ve ever been. A recession is coming.

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