Markets 2022: Bear or Bull?

[Allan]

There are two schools of thought amongst analysts trying to predict 2022 markets.

Some analysts are predicting a booming economy as Covid impact diminishes in the spring. At the same time supply chain issues will help to reduce inflation and as a result we'll see a good year overall in the markets.

Others are predicting a correction in historical territory. It could be 20% to even 50% and I saw one analyst writing the other day that predicted as much as a 70% drop. The reason for this would be the fact that governments have propped up markets using central bank levers and that party has to come to an end at some point.

What do you think?

 

[Fabiusbile]

What do you think?

I don't care.
I always like to say Russia is like a submarine, and I am a member of its crew, whether it is up or down, I am the same... Although I am not a submariner, I think the allegory is clear. There are things that I do not influence and no matter what my attitude to this is, nothing will change, only the efficiency of what is entrusted to me depends on me. This submarine will still be my grave. The commander influences the economy and the level of immersion, but is the commander chosen on a submarine? No, he's being assigned there.

 

[Ug make hammer]

Bull Weasel. It will charge right down a hole and refuse to come out!

 

[Mycroft]

There are two schools of thought amongst analysts trying to predict 2022 markets.

Some analysts are predicting a booming economy as Covid impact diminishes in the spring. At the same time supply chain issues will help to reduce inflation and as a result we'll see a good year overall in the markets.

Others are predicting a correction in historical territory. It could be 20% to even 50% and I saw one analyst writing the other day that predicted as much as a 70% drop. The reason for this would be the fact that governments have propped up markets using central bank levers and that party has to come to an end at some point.

What do you think?

Like Fabiusbile (but for a different reason), I don't care.

As long as US economic policy favors the stock market (think Globalists) over Main Street (think Nationalists), the stock market gamblers win and Main Street gets screwed.

 

[Allan]

Like Fabiusbile (but for a different reason), I don't care.

You don't have a 401k or mutual funds?

As long as US economic policy favors the stock market (think Globalists) over Main Street (think Nationalists), the stock market gamblers win and Main Street gets screwed.

It matters for retirement planning. Main Street includes small investors.

 

[Mycroft]

You don't have a 401k or mutual funds?

It matters for retirement planning. Main Street includes small investors.

The small investors are irrelevant. They are just going along for the ride.

The stock market is built on gambling and the big money investors determine where it goes...up or down. Either way, they win depending on their bets.

The big money investors also shape government economic policy...if they can...to their benefit. They don't care about the small investors. And they certainly don't care about the effects of their actions on Main Street.

 

[Allan]

The small investors are irrelevant. They are just going along for the ride.

That's true but if you hitch your wagon to the market it always goes somewhere. In the past 20 years the Dow has grown 235%, S&P 260%, NASDAQ 640%. It has had hiccups but has benefited even small investors willing to save and leave the funds in to grow. A 'little guy' investing over the last 20 years in an ETF like VTI would have seen gains of 324% over that period.

The stock market is built on gambling and the big money investors determine where it goes...up or down.

What you are gambling on is the success of (in your case) American corporations and they are exceptional at controlling costs and growing their business.

Either way, they win depending on their bets.

Investors win. Big and small.

The big money investors also shape government economic policy...if they can...to their benefit.

Absolutely but when they gain (from government policy) their shareholders gain.

They don't care about the small investors. And they certainly don't care about the effects of their actions on Main Street.

That's a bit of an oversimplification. Companies care about shareholders and all shareholders gain similarly in proportion to their individual investment. The largest and smallest investor all get the same percentage growth and dividends.

But to your point the big mutual fund brokerage houses royally screw investors through very high fees and poor return compared to overall market growth. And that's not even including riskier hocus-pocus instruments like derivatives and the sub-prime mortgage disaster.

 

[Mycroft]

That's true but if you hitch your wagon to the market it always goes somewhere. In the past 20 years the Dow has grown 235%, S&P 260%, NASDAQ 640%. It has had hiccups but has benefited even small investors willing to save and leave the funds in to grow. A 'little guy' investing over the last 20 years in an ETF like VTI would have seen gains of 324% over that period.

What you are gambling on is the success of (in your case) American corporations and they are exceptional at controlling costs and growing their business.

Investors win. Big and small.

Absolutely but when they gain (from government policy) their shareholders gain.

That's a bit of an oversimplification. Companies care about shareholders and all shareholders gain similarly in proportion to their individual investment. The largest and smallest investor all get the same percentage growth and dividends.

But to your point the big mutual fund brokerage houses royally screw investors through very high fees and poor return compared to overall market growth. And that's not even including riskier hocus-pocus instruments like derivatives and the sub-prime mortgage disaster.

I have no problem with small investors going along for the ride with their paltry thousands invested in the stock market. Hell, get it if you can. I suggest safe investments so you don't get hammered when there's a downturn.

But I'm talking about a different issue...that is, the manipulation of the stock market by the big investors. The ones betting BILLIONS. They are the ones who control the stock market and they control national economic policy to benefit themselves. And that economic policy adversely affects EVERYONE on Main Street. The big money investors and their bought and paid for politicians don't give a rat's ass about Main Street economics.

 

[rickc]

Watch the FED!

They are charged with full employment and controlling inflation.

It seems everyone is complaining about inflation. The FED says they are going to stop it. Raise the fed fund rate, taper the bond buying and reduce the balance sheet. Do you realize they are the largest purchasers of home mortgages since the Bush depression.

There is a real reason to be a bear in this climate. The FED has a history of killing a vibrant economy.

 

[Allan]

I have no problem with small investors going along for the ride with their paltry thousands invested in the stock market. Hell, get it if you can. I suggest safe investments so you don't get hammered when there's a downturn.

Paltry thousands become good retirement income if invested early and regularly.

But I'm talking about a different issue...that is, the manipulation of the stock market by the big investors. The ones betting BILLIONS. They are the ones who control the stock market and they control national economic policy to benefit themselves. And that economic policy adversely affects EVERYONE on Main Street. The big money investors and their bought and paid for politicians don't give a rat's ass about Main Street economics.

I can't disagree with anything you've said here. For years I've been preaching the evils of mutual funds' terrible returns. My GF's fund (Scotia Diversified Monthly Income Fund) has returned less than 6% annually in the time she's owned it, while the market has returned better than 20%. Why would this be? The traders at Scotiabank aren't incompetent; surely they can perform closer to market results. The gap between 6% and 20% is a result of fees layered on by the fund and its components.

Not surprisingly if she'd owned Scotiabank shares instead of their pathetic fund she'd have seen an annual return of 16% (growth + dividend). An additional 10% annual growth might not seem like much but a simple spreadsheet calculation will show that it's the difference between a lifetime's income or the money running out not long after retirement.

The fees charged by the big brokerage houses are nothing short of extortionate. The average American pays 150K in fees over the lifetime of their investment. That 150K compounded over a lifetime of investment can at retirement be the difference between comfort and poverty.

 

[jonny5]

There are two schools of thought amongst analysts trying to predict 2022 markets.

Some analysts are predicting a booming economy as Covid impact diminishes in the spring. At the same time supply chain issues will help to reduce inflation and as a result we'll see a good year overall in the markets.

Others are predicting a correction in historical territory. It could be 20% to even 50% and I saw one analyst writing the other day that predicted as much as a 70% drop. The reason for this would be the fact that governments have propped up markets using central bank levers and that party has to come to an end at some point.

What do you think?

I would say it depends on consumer confidence as always. Govts ending QE would certainly tend to reduce demand, but I just dont see the easy money train ending. It would take a real recession to drop the stock market and even then would it even dent it? Capitalism endures.

 

[gbg3]

I'm hoping for a 10-20% correction as I'd like to invest some. I think we'll likely get that due to interest rates going up and all.
I don't expect a 50% drop, but should that occur, I'll definitely get a little over invested as I'd really see that as an opportunity.
The only thing I've bought in a really long time (years) are some I bonds - sort of the same idea as buying TIPS. You can only invest 10,000 per calendar year per person so I did last month and again last week.
Overall, I'm thinking it will be a not very exciting year overall, when it finishes in December, but maybe with a nice opportunity or two along the way.

 

[gbg3]

I have no problem with small investors going along for the ride with their paltry thousands invested in the stock market. Hell, get it if you can. I suggest safe investments so you don't get hammered when there's a downturn.

But I'm talking about a different issue...that is, the manipulation of the stock market by the big investors. The ones betting BILLIONS. They are the ones who control the stock market and they control national economic policy to benefit themselves. And that economic policy adversely affects EVERYONE on Main Street. The big money investors and their bought and paid for politicians don't give a rat's ass about Main Street economics.

No doubt, those big investors simply own the market and its direction! And they sure do both drive and control economic policy.

 

[reflechissez]

I'm hoping for a 10-20% correction as I'd like to invest some. I think we'll likely get that due to interest rates going up and all.
I don't expect a 50% drop, but should that occur, I'll definitely get a little over invested as I'd really see that as an opportunity.
The only thing I've bought in a really long time (years) are some I bonds - sort of the same idea as buying TIPS. You can only invest 10,000 per calendar year per person so I did last month and again last week.
Overall, I'm thinking it will be a not very exciting year overall, when it finishes in December, but maybe with a nice opportunity or two along the way.

You actually had that opportunity in early 2020. As a non-professional, It is highly unlikely that you will invest in a steep, down market. It's against human nature; you'd be better off dollar cost averaging and ignore what the market is doing.

 

[Callen]

I'm very happy where we are in the markets no matter which way it goes.....absent a total crash of course we will be just fine. We adjusted in 2020 and are slightly overweight interest bearing bonds etc and slightly underweight on blue chip, high dividend equities. We don't do mutual funds etc.

DH does have a bit of money in a "sandbox" he plays with. He has a scientific/technology background so he likes to play in that space. He took a gamble on mRNA technology a few years back....love you honey! Currently he is into companies that are focused on the development of hydrogen as an energy source.....pariculary the economical transportation of it... I think I have that right.

 

[Ahlevah]

I voted “Other.” I don’t presume to know where the U.S. stock indexes are headed, but I don’t think this is the time to assume a lot of risk in areas that are richly valued. We’re already seeing a bear market in some of these high-flying, money-losing tech stocks, and historically once that gets started it doesn’t stop as week after week they grind lower in price. I mean, it’s not like there are value fund managers sharpening their pencils and lining up to invest in shares of Teladoc or Pelaton, you know? It’s sort of like investing in tech stocks in 2001, and then waiting for them to grow into their valuations while they tread water for a decade.

 

[Ahlevah]

I'm hoping for a 10-20% correction as I'd like to invest some. I think we'll likely get that due to interest rates going up and all.

I’m almost fully invested, and will remain so. Timing the market is difficult to do successfully. I pick my own stocks using value metrics, and can always find something worth buying. Last year it was energy, lots of energy. This year it’s pharmaceutical companies like Abbvie and Bristol-Myers Squibb, some old tech like Intel, Qualcomm, and Cisco Systems, and select retailers like Williams-Sonoma and Target. None of these companies are particularly expensive, and some are, in fact, quite cheap.

These markets are really turning into stock pickers’ markets as we see broad disparities in performance between different sectors. I just try to focus on buying great companies at a good price and then hold them until I can substitute what I feel is a better candidate.

 

[Ishm]

Watching to see how the increases in global interest rates needed to curb inflation impact liquidity in the global markets. Could see some flight to safety due to global uncertainty and hence a stagnant or bear market if interest rates climb too fast. Labor shortages look like being a constraint on some developed countries where reduced immigration and the covid hits to study are holding back labor force growth.

I am not expecting huge market growth this year even with the supply chain constraints hopefully easing. Best guess is a relatively flat market, with maybe risk of a dip that works it's way back up during the year. A decent dip would be my buying signal.

 

[gbg3]

A decent dip would be my buying signal.

Same with me.

 

[Ug make hammer]

Watch the FED!

They are charged with full employment and controlling inflation.

It seems everyone is complaining about inflation. The FED says they are going to stop it. Raise the fed fund rate, taper the bond buying and reduce the balance sheet. Do you realize they are the largest purchasers of home mortgages since the Bush depression.

There is a real reason to be a bear in this climate. The FED has a history of killing a vibrant economy.

View attachment 67368416

So you're saying the Fed has a history of holding rates high, even when one of the minor dips turns into a big fall?

Not sure why you expect the Fed to be able to see the future, when nobody can.

 

[rickc]

So you're saying the Fed has a history of holding rates high, even when one of the minor dips turns into a big fall?

Not sure why you expect the Fed to be able to see the future, when nobody can.

All I am saying is be ready the economy and the stock market will take a hit from their action.

Or just ignore me. Certainly doesn't matter to me

 

[VySky]

There are two schools of thought amongst analysts trying to predict 2022 markets.

Some analysts are predicting a booming economy as Covid impact diminishes in the spring. At the same time supply chain issues will help to reduce inflation and as a result we'll see a good year overall in the markets.

Others are predicting a correction in historical territory. It could be 20% to even 50% and I saw one analyst writing the other day that predicted as much as a 70% drop. The reason for this would be the fact that governments have propped up markets using central bank levers and that party has to come to an end at some point.

What do you think?

Whichever way the ‘experts’ lean I go the opposite direction. S&P 8%?

 

[VySky]

Watching to see how the increases in global interest rates needed to curb inflation impact liquidity in the global markets. Could see some flight to safety due to global uncertainty and hence a stagnant or bear market if interest rates climb too fast. Labor shortages look like being a constraint on some developed countries where reduced immigration and the covid hits to study are holding back labor force growth.

I am not expecting huge market growth this year even with the supply chain constraints hopefully easing. Best guess is a relatively flat market, with maybe risk of a dip that works it's way back up during the year. A decent dip would be my buying signal.

The NASDAQ is in correction I believe. I’m going to DCA the hell out if it.

 

[Ug make hammer]

All I am saying is be ready the economy and the stock market will take a hit from their action.

Or just ignore me. Certainly doesn't matter to me

I'm not ignoring you. I'm just active in other threads.

Unlike some previous big falls (in GDP) the Fed rate seems to be following the GDP closely now. They might have learned from experience.

How up-to-date is your graph though?

 

[rickc]

I'm not ignoring you. I'm just active in other threads.

Unlike some previous big falls (in GDP) the Fed rate seems to be following the GDP closely now. They might have learned from experience.

How up-to-date is your graph though?

The graph is just to show history. It is irrelevant.

My contention is when the fed starts raising rates GDP falls bringing on recession. The soft landing never gets accomplished.

Just be ready for it.

Tech Bubble
The NASDAQ rose at an alarming pace, reaching almost 2,200 points in January of 1999. In order to stop the economy from overheating, the federal funds rate was raised six times between June 1999 and May 2000. Unfortunately, despite attempts to cool down the economy, such a stock market frenzy on the NASDAQ had already left an economic mark. It collapsed at the turn of the millennium and was followed by a mild recession. The NASDAQ fell from 3,966 in June of 2000 to 2,471 in December of the same year. By September of 2001, it was down to 1498.

Bush Recession
However, problems began to occur when the Federal Reserve began increasing the federal funds rate as it witnessed the emergence of a new bubble. The federal funds rate was 4.25 percent by the end of 2005. It had been raised a quarter of a point for each of the 13 Federal Reserve meetings held since June 2004.