10 Boring Predictions for 2023
The end of 2022 is close; time to bring up some daring predictions for 2023. Some will happen, some won’t. The idea is not to nail them all but to put them on your radar.
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Table of Contents:
1/ The war in Ukraine comes to an end - Geopolitics
2/ China invades Taiwan - Geopolitics
3/ The Fed cuts rates - Monetary Policy
4/ Crypto comes roaring back - Risk Assets
5/ Commodity prices collapse - Assets
6/ Apple innovates again - Technology
7/ Meta comes back - Technology
8/ AI utilization goes mainstream - Technology
9/ Epic Games IPO - Technology
10/ Kamala Harris becomes the 47th President of the United States - US Politics
⭐️⭐️⭐️⭐️⭐️ - Very Likely
⭐️⭐️⭐️⭐️ - Likely
⭐️⭐️⭐️ - Possible
⭐️⭐️ - Unlikely
The end of 2022 is close; time to bring up some daring predictions for 2023. Some will happen, and some won’t. The idea is not to nail them all but to put them on your radar, as some will seriously impact markets while others will define our future.
1/ The war in Ukraine comes to an end - Geopolitics ⭐️⭐️⭐️
After ten months of war between Russia and Ukraine, the numbers reported by Reuters are devastating:
Deaths - 42,295 people
Nonfatal injuries - 54,132
Missing - 15,000
Displaced - 14 million
Buildings destroyed - 140,000
Property damage - $350 billion
Sadly, these numbers will keep growing until this war ends. More than a prediction, this is a wish: We sincerely hope all Ukrainians have the chance to go back home and rebuild their country in peace.
Unfortunately, it is also possible that this war doesn't end. In that case, it can escalate into something much bigger, something we all must fear: WWIII
2/ China invades Taiwan - Geopolitics ⭐️⭐️
It is well known that China considers Taiwan a “sacred” part of its territory.
Although Taiwan never officially claimed independence from China, it has governed itself separately since 1949. Most people in Taiwan are opposed to reunification because they consider themselves to be a distinct nation with its own culture, history, and democracy.
However, for Chinese officials, the “Taiwan problem” challenges China’s sovereignty and territorial integrity. Still, there is an obvious strategic incitation for China to take control of Taiwan: control of the semiconductor supply.
Taiwan accounts for 66% of global semiconductor revenue, and China for only 8%.
The economic and strategic stakes are so high that the United States cannot afford to let China invade Taiwan.
The next two decades will be all about technology growth, with AI, EV, AR/VR, 5G/6G, edge computing, data processing, genetics, IoT, blockchain, big data, and other emerging technologies. While they are all vastly different, they have one thing in common: They will all need semiconductors.
This means one thing:
Whoever controls the semiconductor supply controls the future!
3/ The Fed cuts rates - Monetary Policy ⭐️⭐️⭐️⭐️⭐️
We are facing the most anticipated recession in history in 2023.
And usually, this means that the Fed cuts rates. Clearly, that would go against the hawkish tone employed in the latest FOMC meetings and would be a complete 180º turn against expected policy.
If this prediction were to play out, I would expect it to be in Q3 or Q4 ‘23, as the Fed will first need to pause the current hiking cycle to be able to then start cutting rates.
Prior to the last three recessions, the Fed cut rates a few months before the recession started. Not to say that this is a certainty to happen again, but the precedent surely raises the odds of its happening this time. In addition to the most anticipated recession in history, we have the most anticipated Fed pivot.
Owning US bonds (10–yr & 2-yr) ahead of a recession is a no-brainer.
4/ Crypto comes roaring back - Risk Assets ⭐️⭐️⭐️
It has been a tough year for crypto believers, with collapse after collapse since May ‘22. The fall of the golden child (SBF & FTX), which was most likely due to fraudulent behaviour, will erode trust in crypto and considerably slow down mass adoption.
It is possible we’ll see a relief rally; but unless the Fed pivots, risk asset growth will be very limited and not worth chancing.
That said, even if liquidity comes back, I doubt retail investors will dip their toes into crypto again for a while — unless some fabricated narrative is pushed out.
Right now, the entire crypto market capitalisation sits at $760 billion, far from the $2.9 trillion peak.
This sector will remain the Wild Wild West until a proper regulatory framework is designed and applied to cryptocurrencies.
While I will not advise investing in cryptocurrencies because of the lack of regulation, if you are already involved or really want to take the risk, I’ll suggest the following tips:
Choose self-custody over leaving your assets on exchanges.
Stick to the big ones like Bitcoin or Ethereum (less upside but “safer”).
Invest only what you can afford to lose.
Allocate a small percentage of your portfolio (max 5%)
DO NOT use leverage or some magic yield-generating protocol.
Remember, this is a risk asset.
Buy, forget about it, and revisit it in two years.
5/ Commodity prices collapse - Assets ⭐️⭐️⭐️⭐️
The growth in commodity prices has been fueled by supply chain disruptions, war, energy price crises, high inflation, and a strong dollar.
We can expect pressure to ease onat least one of those fronts.
One sure thing we see when we look at historical data is that every time we witness such growth, commodity prices tend to contract shortly after.
6/ Apple innovates again - Technology ⭐️⭐️⭐️
Apple is the largest company on earth by market cap, but what have they done since the launch of the iPhone?
Don’t get me wrong, I love Apple products and own an iPhone, iPad, MacBook Pro, iMac, and iWatch, amongst other things; but it feels like the innovation has not been there since Steve Jobs died.
In 2001, Apple changed how we listen to music with the iPod and iTunes.
In 2007, they created the market for smartphones with the iPhone and shortly after with the App Store.
In 2010, they created a new market with the iPad.
Steve Jobs died in 2011.
Since Jobs died, they have not changed the game as they did during the decade before. Sure, they improved the performance of their products dramatically and came up with some nice things like wireless headphones and the iWatch, but no new game-changer product.
2023 could be the year Apple innovates again with the Apple Glasses.
The rumour is that Apple is developing at least two augmented reality projects (AR).
We will hear much about AR/VR in this decade as technology has improved greatly, and devices are growing ever more powerful.
Augmented reality glasses will enable many possibilities, like an enhanced experience during live events, an emergent experience while watching a movie, or a more efficient shopping experience. With iPhones being so powerful, we can expect them to complement the new AR/VR devices.
AR glasses will merge our physical world with the virtual one.
If one company can pull this off, it is Apple!
7/ Meta comes back - Technology ⭐️⭐️
Meta (the former Facebook) has lost $800 billion in market cap since the summer of 2021.
The pivot to the Metaverse has been painful so far, but if the Metaverse were to get more traction and to become substantially more than a hyped word in a pitch deck to raise money, Meta could rise again.
The question is: Can Meta come back with Sheryl Sandberg's execution skills?
I am not sure, to be honest!
Also, from a product point of view, I find Meta’s Metaverse very childish; and with Epic Games working on their own Metaverse, we can expect the competition to be fierce. Still, Meta is leading the race, thanks to its network effect.
8/ AI utilization goes mainstream - Technology ⭐️⭐️⭐️⭐️
People have been amazed by OpenAI, ChatGPT 3, and Dall-E 2.
“OpenAI is an artificial intelligence (AI) research laboratory consisting of the for-profit corporation OpenAI LP and its parent company, the non-profit OpenAI Inc. The company conducts research in the field of AI with the stated goal of promoting and developing friendly AI in a way that benefits humanity as a whole.”
ChatGPT 3 (Wikipedia)
“Generative Pre-trained Transformer 3 (GPT-3) is an autoregressive language model that uses deep learning to produce human-like text. Given an initial text as prompt, it will produce text that continues the prompt.”
Dall-E 2 (Wikipedia)
”DALL-E (stylized as DALL·E) and DALL-E 2 are deep learning models developed by OpenAI to generate digital images from natural language descriptions, called ‘prompts’.”
For weeks, we have seen people sharing their AI-generated content on Twitter. It’s been fun.
Here is a sample using OpenAI playground. I typed “AI is more than just a hyped word” as a prompt and got the following back:
“AI is a broad and ever-evolving field of technology that leverages computer science, mathematics, and engineering to create intelligent machines that can interact with and understand their environment. AI has been around for decades, but has gained more attention recently due to the rise of advanced computing capabilities, such as machine learning, natural language processing, and deep learning. AI can be used to automate mundane tasks, provide insights from data, and even take on more complex tasks such as decision-making and problem-solving. AI is not just a hyped word, but an incredibly powerful set of tools that are transforming the way we work, live and interact.”
Now here’s a sample using the now-famous ChatGPT. This time, I typed the prompt “Is AI dangerous for humanity?”
“Artificial intelligence (AI) has the potential to bring significant benefits to society, but it also has the potential to pose risks and challenges. Some experts have raised concerns about the potential negative consequences of AI, such as job displacement, privacy issues, and the possibility of AI being used for harmful purposes. It's important to carefully consider these risks and take steps to mitigate them as AI continues to advance. However, it's also important to keep in mind that AI is simply a tool, and like any tool, it can be used for good or bad purposes depending on how it is developed and used. The key to ensuring that AI benefits society is to carefully design and regulate its development and use in a way that takes into account the potential risks and benefits. This can include measures such as establishing ethical guidelines for the development and use of AI, developing and enforcing regulations to protect people's privacy and security, and providing support and training for people who may be affected by job displacement due to AI.”
This output is not perfect, and it’s rather humdrum, but at the same time it’s both very promising and rather scary.
Finally, here is a text-generated image using Dall-E 2. Here was my prompt: “a realistic photo of a bear playing basketball and wearing a Christmas hat cyberpunk unreal engine”
Dall-E gives you four options, and you can iterate from there.
While all the above is very exciting, the next release of GPT (GPT 4) - is rumoured to support up to 1 trillion parameters, which is nearly a sixfold increase from the current 175 billion GPT 3 parameters.
With such power, the applications able to integrate AI will be almost unlimited.
9/ Epic Games IPO - Technology ⭐️⭐️⭐️⭐️
The term Metaverse was used in many pitching decks in 2021 and 2022.
It is expected to be the next big thing, and while I will not go into detail about it today, I promise a deep dive into it in early 2023. I think it is important to keep a close eye on Epic Games.
In case you don't know, Epic is the company behind Fortnite (a famous game amongst teenagers) but also behind unreal Engine (a 3D computer graphics game engine).
Epic’s Metaverse news dropped on April 2022, as per TechCrunch:
“Fortnite-maker Epic Games announced today that it has raised $2 billion in funding from Sony and Kirkbi, the parent company of the Lego Group, with both companies investing $1 billion each. This latest funding round gives Epic a money equity valuation of $31.5 billion. Epic says the new funding will go toward its efforts to build its kid-friendly metaverse and will also support its continued growth.”
I have been trying to buy some Epic Games shares pre-IPO. I think they are well positioned to dominate in the coming decade simply because of their IP and knowledge in generating a 3D environment live.
If you have seen the Spielberg movie Ready Player One, you must have picked up on the high-quality, fast virtual reality that is coming to market.
For the Metaverse to become a thing, I expect the quality to be at least what we see in Ready Player One.
Enter Epic Games’ Unreal Engine. Here are a few sample images showing what Unreal Engine can do.
Imagine those kinds of images rendered on the go while you’re playing or exploring the Metaverse… mind-blowing! Just for fun, scroll back up and compare with the image from Meta’s metaverse at the bottom of pg. 12 — the difference is shocking!
To Unreal Engine, add the knowledge that Epic Games has gained from 390 million registered users on Fortnite.
Are you connecting the dots now? Epic Games is Ready Player One, if still at a much smaller scale.
If successful in scaling its technology, Epic Games will have a market cap in the trillions range one day (currently, it has a $32 billion valuation). While we don't have much information about their IPO, some experts expect it to come in 2023. If you can, buy and hold it for five to ten years.
10/ Kamala Harris becomes the 47th President of the United States - US Politics ⭐️⭐️
I know politics is a touchy topic, so before talking about it, I want to specify that I am apolitical and not affiliated with any party in any country.
Joe Biden is 80 years old and will be 82 by the next elections. His media appearances are sometimes nonsense, calling into question his fitness to be in the Oval Office.
As of today, the 2024 election could be a remake of the Trump/Biden 2020 race.
I struggle to see the Democrats choosing someone else to represent them, but at the same time, I struggle to see Biden fit enough to run again.
The most elegant way to put someone else in the 2024 race would be for Kamala Harris to become president before the end of Biden’s term, and considering his age, it could be easily done based only on his health.
This is pure speculation, but you may agree it has legs if you take a logical approach rather than an emotional (and biased) one.
Once again, I do not hope Kamala is the candidate but acknowledge the possibility.
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As the old year fades away,
We bid it a fond farewell,
And look ahead to a brand new day,
A chance to ring in the New Year and all it has to tell.
The clock strikes twelve, and the champagne pops,
As friends and loved ones gather around,
We toast to the promises that lie ahead,
And the memories of the year we've found.
The future is a blank canvas,
Waiting to be painted with our dreams,
We'll dance and sing and laugh and love,
And chase after all that life gleams.
So let us embrace the New Year,
With open hearts and open minds,
And together, let us make it our own,
Leaving the past behind.
As you might have guessed, the poem above was AI generated!!!
We wish you a happy new year a few days early and hope to see you around in 2023.
Interesting predictions, thank you. Given how Kamala has been sidelined and muzzled (by whom, it would be fascinating to know) during this administration I don’t believe she’d win the nomination.
BTW it’s Apple Watch not iWatch.