How lucrative will the stock market become in 2022?

Good evening, hivers!

Here again to write about some thoughts that I have about the stock market (worldwide) in 2022. I will also talk about the market in general and even show my choice of sectors and which not, this year. Worth mention is that I have a sort of “all weather portfolio” and my stocks count for 30%. So, I use a lot of my time thinking- and looking at stocks to pick. I also work closely to the stock market every day, so it is kind of my thing – I enjoy it guys!

In 2022 I believe that the investors in general will be afraid of doing investments - the market prices in general are sky high (compared to earlier years)!

Just think of what a year 2021 became, both in terms of return on stocks and crypto, everything is rising in price! This is also even though we got restrictions all over the world in the start of the year as well as end of the year – everything was closed here in Norway at least! The latter must have some impact whatsoever, right? Still, the exchanges did not move a single millimeter - not in December as well. 2021 ended with a rise in the price all over the place and one of the most important indexes, or at least that are followed by many, is the S&P 500 in New York. The latter index ended with an upside of 27%.

When you think about it, it's quite extreme right? Almost as extreme as tokens that go 10 times in a week, LOL! We are talking about a market that is crammed with many millions of buyers and sellers, a market that is much larger than any token! What’s normal “for the man on the street” is a 5-7% return (YOY), while the S&P500 has increased by 27% - it is almost 5 times better than what you can expect! Something is not right! Or all part of the numbers game! But the year before there was also not normal when you think about it… Energy boom, "reopening year", pandemic measures, new president of the United States and much more. For most of the population, vaccination and reopening where the everyday life. Large parts of the world screamed for goods and services. Many companies had a good year with double-digit growth (at the percentage level). At the same time, many countries spent an enormous amount of money on crisis measures, and the central banks intensified the upswing. The regime of ultra-low interest rates and “violent” money printing did not end in 2021 either! As a result, the world economy also ended up growing more than in a long time. We probably got up to almost 6 percent. We must go back to the early 1970s to find similarities.

What about 2022?

Personally, I do not believe in a year where the indexes will grow as much as 2021. The extreme monetary and fiscal stimulus will be reduced or “we will be lost”. The key policy rate will be raised worldwide, which must lead to a general upswing in the crypto market! The Central Bank of America (FED) has changed its attitude to inflation and may come with its first rise already now in March, it remains to be seen and we are excited on the decision!

At the same time, companies' earning capacity will also decline, not to zero, but probably to a "single-digit" level. I think we are moving towards more normal conditions, and it is pleasant to think about. The private economy will probably stabilize, and we will have more predictable points to deal with. Not that there is any danger that it is abnormal and unpredictable, but I personally know that the heart rate stays a little lower in a normal world, and we need it from time to time. It will probably be a consumer party in 2022, so it's worth checking out some companies that offer some form of cultural activity. The latter sector will probably see a strong growth and I think I will buy a lot of shares concerning the cultural life.

The stimuli that have also fueled the investors willingness to buy stocks will probably also disappear or ebb out, so we will probably lose some momentum here, as you will see, in the world.

However, it is always possible for “the man on the street” to make money. For example, it is not bold to say that industries that typically live well with high interest rates can do well this year as well. I'm talking about the financial sector. Also, in the stock climate of 2022, big and solid companies that make a lot of money already, seems like stable investments.

The opposite is obviously true for many of the growth companies priced on the hope of future earnings. Such shares are often unhappy when interest rates rise. You should at least do your homework extra thoroughly before attempting to pick such potential future winners.

Here one can see the return on S&P500 in the last 12 months - looks cool, right!? [Source: Infront]

Cheers -Olebulls

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