Some Plans And Changes For 2022:
I've made some changes to the website over the past few weeks!
First, I've continued to expand the Bookstore with additional titles on topics related to business, economics, and investing.
Second, I've updated our Resources page where you can find links (with brief descriptions) to websites for research, education, portfolio management, crypto, and more. Like the bookstore, I'll be adding new links over time.
Third, I am in the process of adding an Archives page where there will be links to articles, white papers, podcasts, and videos.
As for plans, I've got several ideas including "white papers" on a variety of topics, more in-depth research on individual stocks and ETF's, and thoughts on portfolio management. Let me know if you have any specific questions or topics I might address for you.
For What It's Worth
Prediction is very difficult, especially if it's about the future - Niels Bohr
I always hesitate when I get the question, "so what's the market going to do next year?". Quite frankly, I haven't a clue. However, I also realize that "who knows?" is not a very helpful answer. So let me give you some bullet points on my current working assumptions for 2022.
Economy: Expect further expansion in the new year. While likely slowing from a brisk 4th quarter 2021 pace, it should be supportive of continued corporate profit gains.
Inflation: Hopefully, the rate of increase will slow but inflation may remain stubbornly high for some time. This will affect interest rates. Profit margins will be squeezed for many companies partially offsetting the favorable impact from the expanding economy.
Interest rates: Rates across the board have likely bottomed with the Fed clearly pivoting to address inflation. Nevertheless, interest rates have remained remarkably stable of late. When the turn finally arrives is anybody's guess (midyear perhaps?).
Bonds: Rising rates would make bonds less attractive as an investment.
Stocks: I suspect returns from stocks will be positive and will perform better than bonds or cash in 2022. However, expect more volatility. High valuations add a significant amount of risk. And I'm not planning on another year of big gains - positive is good enough.
Commodities: These investments tend to do well in an inflationary environment. If demand for housing, automobiles, infrastructure remains strong, it's hard to imagine the price of energy, steel, lumber, etc. falling much...
Taxes: There is still talk of changes to the tax code. I believe most of the tax increases on capital have been dropped - good news for stocks. Congress will have to act soon. If nothing is done by mid-year, I think tax changes will be off the table for the balance of the year and perhaps through 2024.
Risks: COVID - I think this is becoming less of a risk to the economy and stocks, but who knows. WAR - Will hot wars flare in Ukraine or Taiwan or both? A conflict between China and Taiwan (a major supplier of semiconductor chips) would be particularly damaging to the global economy. And there's always the Middle East. CONSTITUTIONAL CRISIS - There are a number of scenarios to consider. I'll leave those to your imagination. DOMESTIC POLICY ERRORS - These are likely to be (if not already) made by the Fed, CDC, and the Executive Branch. The law of unintended consequences is immutable and those consequences can have lasting and very damaging impacts on our economy and financial markets. UKNOWN UNKNOWNS (Hat Tip: Donald Rumsfeld) - There's always something unexpected that comes our way...
I am working on a 2022 outlook piece expanding on these points which I hope to have ready in a couple of weeks.
Mark Your Calendars!
Final 2021 estimated tax payments are due January 18, 2022. Don't be late! Uncle Sam can work up quite a temper when he's not paid on time...
And Finally...
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