First time investors would be forgiven for thinking this whole industry is a giant scam. 2023 was a year defined by uncertainty and volatility. No doubt a year to forget for many investors. Bitcoin prices performed the best. Stocks performed quite badly for the majority of the year, only to be saved by a December rally to close out 2023. Many Stock market investors were left with their tails between their legs as the market dove in February and again in June. It wasn’t all doom and gloom though, with markets rallying above the January start in December. Crypto was even more volatile, with many price dips along the way, climbing back towards high highs faster than the stock market at times.
For an investor who invested a thousand dollars in the ASX200, the current value of their investment stands at roughly 1100 dollars at the end of December. The stock market faced significant challenges primarily driven by concerns about dwindling consumer demand. The decision of the Reserve Bank of Australia to raise interest rates added to the unease, prompting investors to scrutinize the potential impact on consumer spending throughout the year. Global conflicts further exacerbated the situation, particularly for Australia, given its reliance on exports. Any disruptions overseas tend to have adverse effects on the country’s markets, contributing to the complexities faced by investors. Then December hit and the Santa rally began. Almost all the gains in 2023 for the ASX200 were made during December.
First-time investors might find themselves a bit more apprehensive, especially if they ventured into individual stocks, given the heightened volatility experienced throughout the year. Depending on the timing of their purchases, many newcomers to the market may discover they are still grappling with losses. If an investor started at the beginning of this year in stocks and checked their account half way through the year, they’d probably be cursing. The unpredictable nature of market fluctuations has left some first-time investors feeling somewhat bruised. It’s times like these that it’s good to remember that investing in the stock market is for the long term!
The real estate market was a story of two halves. There were moments where it looked like doom and gloom. Other moments looked like the highs would only become higher. Overall the market finished off Higher than the start of the year. Whilst interest rates made it more expensive to purchase a home, higher than usual immigration and overseas demand continued to pump money into the real estate market. Although some investors will see better returns than others. Certain cities shrunk in value and less houses were being sold. December was a particularly bad month, with cracks beginning to form in the Sydney and Melbourne markets.
In Melbourne, the average house owner added a modest 4% to their asset value. In Sydney it was 11% and Brisbane it was 8%. Although not everywhere was sunshine and rainbows, it was still possible to make a handsome return. In the end, although there was a lot of talk about a housing collapse, they were ultimately wrong.
Crypto finished up the year quite strong. To clarify, when I mention crypto in this article, I am specifically referring to the big two. Bitcoin and Ethereum. By far, the two largest coins in the market. Whilst Bitcoin took at least 3 major dips in price in 2023, it managed to finish the year quite far ahead of where it started. If you purchased one bitcoin at the start of the year, you would be up $40’346. That is an increase of 171% for the year. Etherium pretty much trailed bitcoins price at a much lower level. It also managed to be up by more than 96%. If you purchased one ethereum on January 1st 2022, you would have gained $1721 dollars by January 1st 2023.
Similar to stocks, crypto investors might experience a sense of being bruised and battered. The year witnessed numerous highs and lows, marked by at least three major price crashes throughout the year. The heightened volatility may have posed a mental challenge for newer investors. Unfortunately when it comes to investing, up is rarely a straight line. Many investors would likely have exited the market multiple times with such volatility rather than waiting for the year end.
Stock investors were better off than they had been in 2022 but only because December was a big month! Similarly Real estate investors were also better off than they were the previous year despite all the doom and gloom commentary. Crypto far outperformed other markets but only if you held the whole year. Naturally, each individual’s portfolio is unique. Performance relative to the market will depend on how each of us allocated our funds. Investors may discover that they have either outperformed or underperformed based on their specific investment strategy.
A new year has dawned, and 2024 holds its distinct set of challenges and opportunities. Seasoned investors are likely to be revaluating their portfolios in the coming weeks, reflecting on the past year and making strategic adjustments. If you entered the investment arena for the first time in 2023 and faced challenges, don’t be disheartened—every setback is a learning opportunity on the path to financial growth.
Wealth Kingdom 
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