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New Year 2022!

To all my readers, wish you belated happy new year. After travel back from India I kept on postponing my new year blog for no reason...In a way it was good thing since I would not have expected so much market action in first three days of new year. Before we get into what could be in store for 2022, let's look at how some of the predictions/recommendations did for 2021.

Macro Predictions:

  • GDP growth, interest rates and unemployment rates were on target as per predictions.
  • S&P did much better than predicted (20% better)
  • Schools did open in Fall'21
  • COVID predictions were completely off the mark partially due to emergence of Delta and Omicron variants - who would have thought that we would be having million cases (daily) in US in 2022?
Stock recommendations:
  • Winners: SPG (94%), MAC (75%) and WFC (75%), XOM (59%), OKE (51%)
  • Losers: CLVS (46%), BABA (44%), SQ (36%), NIO (33%)
Overall portfolio of recommendations did no better than S&P's return of 27% (when it comes to my personal portfolio I was negative for 2021 due to untimely bets on Chinese internet players including DIDI - but that's risk one has while investing in markets)

Let's look forward to 2022. It has been only 5th day and we already had few milestones like:
  • Apple becoming first $3T market cap company
  • Tesla almost reaching delivery of million cars per year 
  • Toyota becoming biggest car manufacturer in US (overtaking GM)
  • Nasdaq dropping by 500 points on third day of first week of market
  • Fed finally saying that it's ready to deal with inflation (which is no more transitory) with promise of 3 rate hikes in 2022, 2023 and another 2 in 2024. That's nearly 2 full points of interest rates. No wonder markets reacted badly - especially high-flying tech stocks
Let's look at some of the predictions and recommendations for 2022.

Macro predictions:
  • 2022 would end with COVID becoming endemic - means it would be around but people would treat it like seasonal flu. Variants would keep coming but they would be dealt with vaccine booster or annual shots
  • Democrats would most likely lose control of one of the houses (house or senate) making remaining two years even more in-effective for President Biden
  • 10 year treasury would be between 2 to 2.5%
  • Unemployment would be reaching closer to 4 to 4.4% partially due to lower labor participation (aka Great Resignation)
  • Annual GDP growth would be 2 to 3%
  • S&P would cross 5000 and would return 8-10% for the year
  • And finally we would all go back to offices at least few days a week sometime in this year
Stock/ETF recommendations:

Given that last year's recommendations did no better than S&P, my strong recommendation is to stick with indexes with balance of SPY, IWM and SML. 

But if you have to dabble into individual stocks and ETF, here are some names.

ETFs: AMLP ($34), XLE ($56), XLF ($39), XLK ($160), KWEB ($33), XOP ($95), SMH ($280)
Growth: ZEN ($95), PLTR ($17), FRSH ($21), CFLT ($55), CPNG ($25), SPLK ($110), Z ($57), AI ($29)
Semi: QCOM ($180), XLNX ($200), INTC ($52)
Big-tech: AMZN ($3200), ORCL ($85), CRM ($220), FDX ($250), JD ($62), BABA ($110). Uber ($43)
Speculative: DIDI ($5), LC ($22), PSFE ($4), AFRM ($70), FUBO ($14), ASAN ($59), MAC ($18)< FSLY ($30)
Old Guard: GM ($60), WFC ($50), XOM ($62)

These are influenced by growth, relative valuation and sell-off in 2021. There is potentially more downside for many of these names. So usual caveat of "do you own research before investing" applies.

I wish you and your families and friends happy and healthy new year 2022!

/Shyam






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