In a world with over 20,000 investments to choose from, it’s still pretty impressive to be my #2 pick for the year ahead. Find out why the ARK Innovation ETF (ARKK) has earned this top honor. The key is to know when to buy your stocks during the current bear market cycle. Read on below for all the details.

A few weeks ago I posted my #1 investment pick for the coming year. That was mentioned in this article.

However, it is not easy to limit yourself to just one choice when there are clearly so many quality choices. So my solution is to roll out my #2 pick for 2023.

Let me set the wallpaper first.

It is now the end of October 2022. And who is reading my ongoing market commentary I know very clearly that I am still very pessimistic about the near-term outlook. My expectation is for the S&P 500 (SPY) to find a bottom somewhere between 2,800 and 3,200 in early 2023.

But then it becomes glorious for the bulls.

Because from that darkest hour, stocks will soar. We are really talking about the “phoenix rises from the ashesThis is how all new bull markets begin.

In fact, all the way back to 1900, the average first year gain for new bull markets is +46.2%.

My number 1 choice for the market was TNA which is a 3X bullish ETF targeting small cap stocks. That’s because small caps outperform the S&P 500. Plus, you benefit from 3x leverage.

However, with that 3X leverage comes an additional risk that not everyone will bear. So yes, it would be easy to simply switch to the 1X small-cap ETF variant like IWM. That would indeed go quite well if the bull market picks up again. Fortunately, we can step it up a notch.

Therefore my #2 investment for 2023 is: ARK Innovation ETF (ARKK)

Right now, Cathie Wood’s fund is the laughing stock of the investment world, as it fell nearly 60% in 2022. Yes, that’s about three times worse than the S&P 500.

The reason is simple. She is focused on the highest growth stocks that also have the highest beta. That’s wonderful when the bull runs… and an absolute death sentence when the bear comes to town.

Again, we’re talking about a great investment idea for 2023… and buying it when the new bull market comes up. So if the average annual return for the S&P 500 during a new bull is 46.2%, I wouldn’t be surprised if ARKK doubles that return without any leverage.

Take another look at the top 5 positions here to see how far these stocks have fallen lately… and thus how much they are likely to bounce back when the bull is ready to run:

tesla (TSLA)

roku (ROKU)

Teladoc Health (TDOC)

Square (SQ)

Zoom video (ZM)

Yes, but here’s the Rub…

If you buy too early, and the market is still racing lower, you will have huge losses. So I warn against buying it blindly without any attention to determining the market bottom.

Again, it is now the end of October 2022. So this is an evolving story that needs to be vigilant on all key indicators such as employment, earnings, inflation, Fed rates and price action. That is the only way to determine when it is time to execute this ARKK trade. Probably sometime early 2023.

If you want help with that timing, grab my “Bear Market Game Plan”.

This offers the best choices to make money now as the bear market is getting lower. Plus help with timing the market bottom so you can load your ARKK shares properly.

To discover “Bear Market Game Plan” >

I wish you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Right”)
CEO, StockNews.com

Editor of Reitmeister Total return

ARKK shares closed at $38.89 on Friday, up $1.02 (+2.69%). Year-to-date, the ARKK is down -58.89%, compared to a -17.15% rise in the benchmark S&P 500 index over the same period.

About the author: Steve Reitmeister

Steve is better known to the StockNews public as “Reity”. Not only is he the CEO of the company, but he also shares his 40 years of investment experience in the Reitmeister Total Return Portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock selection.

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