Looking back on 2022, Gardell believes that the stock market has gotten a little better at taking a beating – compared to two decades ago.

“Once we were out of the pandemic, inflation, energy prices, and a war in the immediate area hit. That is quite a lot of uncertainty at once. If this had happened 20 years ago, there would have been total panic in the stock market. So, the stock market has gotten a little better, I think, at taking a beating.

“During all the strange years when money has cost nothing, quite a few bubbles have been inflated in the system, strange companies that earn nothing and barely have any operations still valued in the billions… And we got strange phenomena like cryptocurrencies and these SPAC companies (special purpose acquisition companies)… Many of these bubbles have been scrubbed away in 2022,” Gardell said.

What will 2023 look like?

Gardell thinks 2023 might start off quite rocky.

“It could be quite dramatic at the beginning, I think. But the recession will surely go away in 2023. It is uncertain how the war in Ukraine will develop… If it escalates, it is a bad scenario, but if there were to be peace, it is clear that it would be favourable for the stock market.

“Those who should be worried are those who had borrowed heavily during the happy days when money was free – the real estate sector and private equity (venture capital companies), as well as telecom companies.

“Other companies that will have a hard time are companies close to consumers. In Sweden, the interest rates hit people immediately, as most people have short-term and variable interest rate loans. Then you have the energy prices. They have a strong dampening effect on purchasing behaviour. It is probably impossible to raise consumer prices anymore, as customers have no money. If you raise the prices, you lose too much volume.”

Inflation changes

The investor believes that the key challenges related to inflation have already been solved.

“We had a whole generation that didn’t know what inflation and interest rates were. Now they know. Now they know that money costs money…

“We see how shipping prices have started to fall, and many raw material prices have also fallen. So, I think the inflation problem is actually solved. The central bank (Riksbank) does not need to intervene anymore,” he concluded.