What 10 well-known investors are thinking about in 2023.

Investment ideas from Ray Dalio, Bill Ackman, Michael Burry, Cathie Wood, Dan Loeb, Carl Icahn, John W. Rogers Jr., John Paulson, Bill Miller and Warren Buffett.

2023 is shaping up to be another year of uncertainty in the markets.  But top investors are hardly sitting on the sidelines.  Here’s a taste of the short-term and longer-term views from well known investors Ray Dalio, Bill Ackman, Michael Burry, Cathie Wood, Dan Loeb, Carl Icahn, John W. Rogers Jr., John Paulson, Bill Miller and Warren Buffett.

Ray Dalio - Founder, Bridgewater Associates 

Billionaire investor Ray Dalio shared a cautious outlook heading into the new year.

Dalio, whose Bridgewater Associates has grown to become the world’s largest hedge fund, says investors are too optimistic about inflation easing.

Dalio’s colleague Greg Jensen recently told Bloomberg that China’s re-opening will fuel prices at a time when many economies are facing recessions.

They both believe that will create more challenges for central banks.

For example, Dalio has said the U.S. Federal Reserve will have to keep raising interest rates — possibly as high as 5.5% — which will have a “harmful” effect on the economy.

That potential weakness, in his opinion, will put more pressure on stocks.

As for investments within the Bridgewater portfolio, you’ll find plenty of blue chip names such as Pepsico, Johnson & Johnson, and Visa.

Bill Ackman - CEO, Pershing Square Capital Management

Billionaire hedge fund manager Ackman made a sizable profit last year hedging against interest rate hikes.

And he remains skeptical inflation will return to the Fed’s 2% target anytime soon.

He does, however think, the appetite for equities may return later this year if inflation eases enough to justify a new course for interest rates.

In the meantime, Ackman continues to hold names such as Universal Music, on the idea that people will listen to music regardless of economic conditions.

He has also likes Lowe’s, which he believes could benefit if people renovate existing homes as the housing market cools.

As well, he’s been investing in long-time favorite, CP Rail.

Michael Burry - Scion Asset Management

Burry’s bearish outlook has been paying off.  And he recently predicted more pain for the stock market.

Burry, of course, is best known for his successful bets against the housing market during the financial crisis in 2008.

His story was chronicled in Michael Lewis’s best-selling book “The Big Short,” which led to an Oscar-winning movie.

Famously camera-shy (I interviewed him for television just once — you can find that on YouTube), we get glimpses of his views on Twitter.

His most recent warning was that the U.S. will face another inflation spike.

While many believe inflation has peaked, Burry tweeted it will pick up again if a recession prompts the U.S. Federal Reserve to cut interest rates and the government responds with fresh fiscal stimulus.

In the second quarter of last year, Burry sold the majority of his stock holdings according to regulatory filings.

In September, he posted “we have not hit bottom yet,” after the S&P 500 had already declined nearly 20% from its peak.

One stock he has continued to hold, according to filings, is private prison operator GEO Group.

Cathie Wood - CEO and Chief Investment Officer, ARK Invest

As we previously outlined in this Substack, Cathie Wood is sounding as bullish as ever.

“Many people have said the types of portfolios ARK manages represent the old leadership. We beg to differ,” Wood told me in a television interview last year.

“We believe what happened (with tech stocks) during Covid… was a warm up for what we’re going to experience in the future.”

ARK is coming off a rough year. 

Rising interest rates took a big bite out of the growth stocks Wood champions.

She’s been critical of the U.S. Federal Reserve, warning in an open letter to the Fed in October that the central bank’s policy may lead to a “deflationary bust.”

Meanwhile, Wood has continued adding to core positions, such as Telsa, Coinbase, Roku, Roblox, Teladoc and Zoom.

“If you look at the fundamentals of our companies, the growth rates are still far superior to that in the general economy. The margin structures — gross margins in particular — are higher on average.”

ARK’s investment philosophy is tied to five main areas: DNA sequencing, robotics, energy storage, artificial intelligence and blockchain technology.

Wood believes innovation in those fields will disrupt industries and deliver outsized growth to investors in the long run.

“Right now in the global equity markets, truly disruptive innovation is priced at roughly $7 trillion.  We believe that number is going to $210 trillion in 2030.  So, it’s going from less than 10% of the market to more than 50% of the market.”

Dan Loeb - CEO, Third Point LLC

Activist investor Dan Loeb of New York-based hedge fund Third Point expects more of the same in 2023.

He has been publicly bearish on growth stocks.

"I don't think camping out in the last decade's darlings, with rosaries in hand, hoping for a comeback, will be the winning strategy," Loeb said in a recent tweet.

In this challenging environment, one defensive stock Loeb zeroed in on was Colgate-Palmolive.

Third Point took a large position in the stock last year and Loeb has been pushing for a spinoff of its pet nutrition business.

Carl Icahn - CEO, Icahn Capital

In September, Carl Icahn shared a sobering message.

“The worst is yet to come,” the billionaire investor told attendees at MarketWatch’s Best New Ideas in Money Festival.

“We printed up too much money, and just thought the party would never end. And the party’s over.”

Icahn sees the bear market continuing and has said the U.S. is already in a recession.

That’s not to say the activist investor is sitting on the sidelines.

There are stocks he continues to like, such as CVR Energy, which he believes remains cheap despite advancing in the past year.

And he continues to shake up boardrooms, with stakes in companies such as beverage-can maker Crown Holdings.

John W. Rogers Jr. - CEO and Chief Investment Officer, Aerial Investments

Rogers Jr, whose firm oversees nearly $15 billion in assets, has said last year’s malaise was predictable, considering the rising rate environment.

But if earnings estimates turn out to be too bearish, Rogers Jr. argues that could make current P/E ratios look more reasonable.

He favors beaten-down names with pricing power such as Paramount Global, a struggling media stock he believes should eventually rebound when the ad market recovers.

He’s also a big fan of Madison Square Garden Entertainment Corp. because of its well-known assets.

John Paulson - Founder, Paulson & Co.

John Paulson became a billionaire by betting against the subprime mortgage market during the financial crisis.

While higher interest rates have created fresh uncertainty in the housing market, Paulson is not expecting anything close to the collapse we saw in 2008.

“Housing may be a little frothy. So housing prices may come down or they may plateau, but not to the extent it happened," he told Bloomberg in September. "The financial market, the banking system and the housing market are much different today than in 2006 and 2007.”

Meanwhile, Paulson has long invested in gold, which he thinks could shine down the road.

“While the current inflation rate is high, long-term inflation expectations are still very low,” Paulson told Bloomberg. “I think what needs to happen for gold to become more responsive is if the Fed ultimately raises rates, the economy weakens, and they pause. And then they see they can’t control inflation.”

“At that point, long-term inflation expectations will rise. People will not believe the Fed can control it. And then I think gold rises to higher levels.”

Bill Miller - Founder and Chairman, Miller Value Partners

Bill Miller earned legendary investor status when his flagship fund at Legg Mason outperformed the S&P 500 from 1991 to 2005.

Some of his investment picks have been roughed up in the past year — not unlike the challenges he faced during the financial crisis in 2008.

But Miller has long argued patience and time are key to long-term success.

He believes anyone with a time horizon of more than one year should do well.

And after the selloff we’ve seen, he’s scanning for attractive valuations.

Miller remains committed to stocks such as Amazon, which he famously bought when the company went public back in 1997.

He also likes Delta Air Lines, pointing to its free cash flow yield.

And he’s a fan of oil companies, such as Chesapeake Energy.

Meanwhile, Miller remains bullish on Bitcoin, despite the crypto collapse.

Critics point to his equally optimistic tone, back when Bitcoin was at its peak.

But note Miller initially bought Bitcoin back in 2014, when it traded around $200.

So this is someone who enjoys the long game.  

Warren Buffett - CEO, Berkshire Hathaway

We’ll get more insight from Buffett when he publishes his annual letter to Berkshire Hathaway shareholders next month.

But don’t expect short term predictions.

Buffett has long criticized Wall Street for selling the idea that pundits can predict the future.

“We have never timed anything.  We've never figured out insights into the economy,” Buffett acknowledged at the company’s annual meeting last year. 

“We have been reasonably good at figuring out when we were getting enough for our own money.”

A modest message, perhaps, from one of the world’s most successful investors.

But it feeds into his most common recommendation to the average investor — just buy an ETF that tracks the S&P 500.

That index has averaged annualized returns of around 11% since 1957.

And it’s a fairly broad to bet on American business, which is core to Buffett’s beliefs.

You’ve probably heard his line, “be greedy when others are fearful,” which he first shared in his 1986 letter to investors.

Buffett typically relishes periods of uncertainty.

In a New York Times opinion piece during the financial crisis in 2008, he wrote  “Bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.”

Berkshire Hathaway’s long-term holdings have included Apple, Bank of America, American Express and Coca-Cola.  

Berkshire’s also been a big investor in energy player Occidental Petroleum.