As the new year begins, we focus our investment ideas on defensives, value, income, and diversification. But a more favorable backdrop for markets should emerge as 2023 progresses and key inflection points come into view.


We expect markets to remain volatile in the near term.


  • Inflation is still high, and the lagged effect of interest rate rises is likely to weigh on economic growth and corporate earnings.
  • We do not think the economic conditions for a sustained equity market rally are yet in place.
  • As the year begins, we focus our investment ideas on defensives, value, income, and diversification.

But inflection points are likely as the year progresses.


  • History tells us that durable turning points for markets tend to arrive once investors begin to anticipate interest rate cuts and a trough in economic activity and corporate earnings.
  • Investors with the discipline and patience to stay invested in line with longer-term goals should thus be rewarded.
  • Those currently sheltering from volatility will need to plan when, and how, to head back into riskier assets.

Navigating these inflections will be key to investing success in 2023.


  • We like value and defensives, including consumer staples and healthcare stocks. We also prefer high-quality bonds.
  • More attractive opportunities to buy cyclicals and growth stocks may emerge later in 2023.
  • For risk-tolerant investors looking to anticipate the inflection points today, we see select opportunities in early-cycle markets like Germany, and among the likely beneficiaries of China's reopening.

Did you know?


  • The S&P 500 fell 19% in 2022, its worst year since 2008. The tech-heavy Nasdaq fell 33%.
  • Energy was the best-performing S&P 500 sector last year, rising nearly 60%.
  • The Federal Reserve raised interest rates by a total of 425 basis points in 2022.

Main contributors: Vincent Heaney and Alison Parums


Read the original report, UBS House View Briefcase: How should I invest in the year of inflections?, 9 January 2023.


This content is a product of the UBS Chief Investment Office