5 things not to buy in 2023

TECHNOLOGY
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It was a year of contradictions.

The drum of the recession continues, interest rates are rising and the stock market is down, but retail sales are up 6.5% over the past 12 months, trailing a 7.1% rise in the cost of living.

There are other reasons why people should consider cutting spending in 2023. The personal savings rate – meaning personal savings as a percentage of disposable income or the portion of income remaining after paying taxes and spending – reached 2.4% in third quarter from 3.4% in the previous quarter, reported the Bureau of Economic Analysis.

🇧🇷There are signs that people are cutting back on certain spending. 🇧🇷

This is the lowest level since the Great Recession and the eighth lowest quarterly rate on record (since 1947). Adjusted for inflation, savings are down 88% from their 2020 peak and 61% lower than before the pandemic, according to government data. The personal savings rate reached 2.4% in November against 2.2% in October.

Are people buying stocks during a bear market and/or have they exhausted their pandemic-era savings? Whatever the reasons, more judicious investment and spending decisions appear to be the most prudent approach – especially given the uncertain economic outlook for 2023.

There are signs that people are already reducing certain expenses. While retail sales were up for the year, they were down 0.6% mom in November, marking their biggest drop in nearly a year, largely because of sluggish car sales.

About those new cars: Total new vehicle sales for 2022 are expected to reach 13,687,000 units, down 8.4% on the year, according to a joint forecast by JD Power and LMC Automotive. MarketWatch reporter Philip van Doorn breaks down all the reasons you might want to skip buying a new car in 2023, aside from their soaring prices.

So what else should you save your money on in 2023? MarketWatch writers give their verdict below.

SPACs

During the pandemic, people loved buying special purpose acquisition companies known as SPACs. In 2021, 613 SPACs were listed on US stock exchanges through initial public offerings, according to SPAC Insider. In the previous year, there were 248 SPAC IPOs. There have never been more than 100 of these before in a single year. There were SPACs associated with Donald Trump and Serena Williams. There were so many that one was called Just Another Acquisition Corp.

SPACs exist as a means of taking private companies public and, theoretically, giving these shell companies a faster and less regulatoryly burdensome means of accessing public capital. The US Securities and Exchange Commission warned investors last April that the so-called advantages of the SPAC process, such as reduced legal liability, might not be as sound if tested in court.

SPACs raised money even though they had no commercial operations or businesses, and tried to use the money to buy something that existed. But investors who bought SPACs that merged with private companies since 2015 suffered losses of 37%, on average, a year after the merger, according to a recent study. The SPAC and the new issue ETF SPCX
down 12% this year. The frenzy for SPACs predictably broke out. But if you see one, stay away from it.

— Nathan Vardi

Cryptography

There are two main reasons not to invest in cryptocurrency in 2023, and neither of them has to do with the precipitous drop in value of most major currencies over the past year, including but not limited to bitcoin BTCUSD🇧🇷
ethereum ETHE
and tether USDTUSD🇧🇷
Investors have long been conditioned to buy on the low and find value where others fear to tread, and then cash in on the high.

Cryptocurrency is different in that there is no correlation to long-held market theories, and buying it amounts to speculation rather than investment. This may sound semantic, but if you look at financial planning holistically then you treat investing as an exercise in risk tolerance – and crypto is all risk.

Which leads to the other main reason to avoid crypto next year: if you buy it, there really isn’t a secure way to store it. There is no federal insurance covering exchange failures and little cyber theft protection for individuals. This leaves you alone, which is not a good place to be with your money.

—Beth Pinsker

Meta Quest headphones

On the consumer front, if you’re really into virtual reality, there’s nothing wrong with jumping on the new Meta Quest two and Meta Quest Pro headsets that were released in 2022 by Meta Platforms Inc. GOAL🇧🇷

Problem is, you might think you bought a BlackBerry BB
phone in early 2007. Apple Inc. AAPL
it’s expected to finally showcase what the Silicon Valley giant’s engineers have been cooking up in a years-long project to jump into augmented and virtual reality, and consumers are expected to at least get a glimpse of Apple’s attempt this year , if not a chance to buy whatever the company produces.

Headphones don’t come cheap: Meta said earlier this year that it was raising the price of the Meta Quest 2 headphones by $100, to $399.99 (128GB) and $499.99 (256GB). GB). The introduction of the iPhone 15 years ago changed the way people look at smartphones, and Apple’s expected leap into this field in 2023 could leave anyone who spent their money on a Meta Quest headset wishing for a new reality.

—Jeremy Owens

meme shares

Struggling companies with business models that appear to be dying and/or struggling often do not perform well in the stock market. But during the pandemic, these companies often had stocks that soared. What propelled them was social media sentiment, driven on platforms like Reddit by a swarm of retail investors.

There was video game retailer GameStop GME🇧🇷
AMC AMC cinema chain🇧🇷
and blackberry dinosaur smartphone. AMC recently announced the sale of an additional $110 million in stock, adding to a total that has already surpassed $2 billion since the theater chain was dragged into the meme stockpile madness. CEO Adam Aron wrote on twitter that the move put the company “in a much stronger cash position”.

GameStop recently reported its seventh consecutive quarterly loss and reiterated its goal of returning to profitability in the near term, but analysts signaled that many challenges lay ahead. During the company’s recent Q3 conference call, CEO Matt Furlong said that GameStop would be open to exploring strategic asset acquisitions or complementary businesses if they were available “in the right price range.”

Buying meme companies like this has worked for some in a booming stock market fueled by ultra-low interest rates. But now we are in a bear market with high interest rates. Corporate essentials are back in fashion. As well as quaint investment ideas like cash flow. The days of meme stock buying are probably over.

— Nathan Vardi

Tesla cars

In recent years, Tesla Inc. TSLA
it stood alone as the top choice for electric vehicles as other manufacturers struggled to get production up and running. But by 2023, there should be many more types of electric cars available, at prices that are expected to drop throughout the year. Prices range from $46,990 for the Tesla Model 3 to $138,880 for the Tesla Model X Plaid.

With major manufacturers like General Motors Co. GM🇧🇷
Ford Motor Co. FORD🇧🇷
Toyota Corp. and Volkswagen XE:VOW
VLKAF
entering the fray, and young Tesla hopefuls like Rivian Automotive Inc. RIVN🇧🇷
Lucid Group Inc. LCID
and Fisker Inc. FSR
Expected to start producing cars, consumers will have a lot more options for EVs.

Meanwhile, Tesla has done little to update the Model 3 since it launched in 2017 and has raised prices to a level that Chief Executive Elon Musk has admitted is “embarrassing” for a company that claims to have a target market price of pasta. for EVs.

The median price for a new EV is $64,249, while a new gas car is $48,281, according to Liz Najman, climate scientist and manager of communications and research at Recurrent Auto, an EV research and analysis company. focused on the used vehicle market. 🇧🇷 After years of not having much choice but Tesla for EVs, 2023 looks to be the year that changes.

—Jeremy Owens

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