Happy New Year! 2022 is almost here so its time to make some fun market predictions as we look for new opportunities and try to manage risk while making that money.
Biggest market story of 2022 will be... more inflation!
That's my boring prediction. This will be driven by a few factors, most notably the price of oil and gas. So get ready to pay more at the pump in 2022! But we all expected that, so what else will drive inflation?
How about food costs rising at an alarming rate? Yes, this is inevitable it seems and will be mostly be driven by not only rising energy costs, but higher fertilizer prices, something farmers are really complaining about right now.
According to the American Farm Bureau, fertilizer sticker prices that farmers in some areas are reporting are up more than 300%! That will surely result in more expensive food prices in the near term as corn and wheat will skyrocket, having a trickle effect on. More in the link here. Weimar Republic anybody?
Now, with gas prices going up potentially as much as 30% next year, will it cause consumers to start actually buying electric vehicles? Probably. I am expecting EV sales increase to 5% of all new vehicle sales (from 2% now). Again, not a huge increase but it will be good enough to excite investors of Tesla, Lucid, Rivian, Fisker, etc.
How will the fed react to all this inflation? By now we all know J-Pow expects/wants 3 small rate increases in 2022 to fight inflation, and that may end up cooling down the real estate market a bit and hurting consumer sentiment.
Tech will be choppy for the first 6 months, but will still see Nasdaq hit new highs in 2022.
Now onto the more interesting stuff. What's going to happen on the Nasdaq? Well for starters, I am expecting AAPL to report increased sales by 30% over the year. The main driver behind this, increased service costs plus some stupid new products (VR headset?). Apparently, the 2021 4th quarter holiday season was likely a hit based on foot traffic and online orders. More people throwing their data into the Apple ecosystem, more data, subscriptions, financed purchases, etc. Seriously this stock will likely hit $200 before June 2022.
But that's just Apple, how about the rest of the Nasdaq? Ehhh, not so good I am thinking. We currently are seeing small caps getting slaughtered and a lot of these fin-tech companies are getting hurt. So big tech will continue to be the strong hand. Personally, I think this will lead to a lot of kangaroo opportunities for TQQQ. Please note, I am currently holding TQQQ up until a sale of $180 (hoping that happens in the first week of January).
Also, important to note that TQQQ will have a 2:1 split on January 13, 2022. So if you own 100 shares at $180, that will turn into 200 shares at $90. More shares but smaller price swings.
Overall, I am expecting the 2nd half of 2022 to be better than the first half of the year. I think we will see supply chain issues ease and consumer spending increases as people just learn to live with this pandemic. I also predict that the travel stocks recover to pre Covid highs as part of a cyclical rotation. This will help the airlines soar and push airline ETF: JETS to $30 (from $21 now).
The mid term elections in November probably will see a Red Wave to fight woke-ism plus inflation, and that likely will have investors confident about capitalism. But what generally happens when right wing politicians are elected to fight high inflation? Hmm I thought I read about a similar scenario before...
Biggest market risks for 2022: Inflation striking fear into investors even more, China releasing new disease variants that are actually dangerous, and Putin starting a war in Ukraine
Fun times. Good luck!
