My best investment idea for next year is not a stock. No grand 2023 S&P 500 EPS estimates or lofty price targets from this observer!
This idea is risk free and may provide an equity-like return next year.
Indeed, I would stay short (from a maturity standpoint) and to the point!
My idea is a Treasury note.
Specifically, the 1-Year U.S. Treasury note, which yielded 4.77% Wednesday morning.
Here is a chart on the 1-Year Treasury note yield:
To this observer, the major restrictive factor that equities face is that “elevated” yield. It not only provides competition (and argues for a relatively low price ceiling) to equities, it also competes and is materially higher than the S&P 500 dividend yield, which stands at only 1.71%. In fact, the differential in yield between the 1-Year Treasury note yield and the S&P dividend yield, at 3.10%, is the highest in over a decade and very wide based on history.
While there will certainly be many stocks that outperform the 1-Year Note in 2023, in my view, a risk free, equity-like return (of nearly 5%) is a suitable alternative to picking a Best (stock) Idea.
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Source: https://realmoney.thestreet.com/investing/fixed-income/doug-kass-my-best-idea-for-2023-16112272?puc=yahoo&cm_ven=YAHOO&yptr=yahoo