2022 - The Year Ahead

Hello everyone and welcome to the February 2022 edition of the boodle blog. We are pleased that you are here with us, and with so much to discuss, we are going to jump right in and offer our opinion on investing in 2022 and how you can profit in the year ahead.
Looking back over the past five years in the market, we can say that those were very good years to be an investor. The total return of the S&P 500 was an incredible 95%. This was nearly double the 10% historical return of the market and we were fortunate enough to be hundred percent invested.
There is an old saying in the canyons of Wall Street – “as January goes, so goes the market”. Here at boodle, we usually don’t pay much attention to these bromides, but this time, we looked at some indicators and they have us feeling less bullish than we have over the past five years. So, let’s look at some of those indicators and share with you our concerns on the possibility of stock market gains on a go forward basis in 2022.
Monetary Supply – The Federal Reserve has been pumping money into the economy as it battled the Covid-19 coronavirus while at the same time, keeping short-term interest rates historically low. The Fed has announced that rates will begin to rise, and here at boodle we see that as the Fed “applying brakes” to keep the economy from going into a recession. Rising rates are not good for stocks.
Geo-Political uncertainty – The friction between Russia and Ukraine has heightened tensions between countries and the U.S. has vowed to help defend Ukraine should it come to that. We can’t imagine a scenario where military conflict is good for stock investors.
Supply Chain Disruption – Because of Covid-19 and the disruption it has caused in the United States and the rest of the world, we have seen a rise in Inflation and we now believe these inflated prices that everyone is seeing when they buy goods and when they buy gas may extend well into the summer and even the fall of 2022. The Fed will try to contain inflation, while at the same time avoiding a recession. We believe they will be successful in 2022.
Let’s also not forget that the 2022 midterms will bring about the possibility of a Republican resurgence in the House of Representatives and the Senate.
So against this backdrop boodle is not expecting 19% returns for 2022. We believe that on a go forward basis you should expect financial headwinds that will keep returns low. Our strategy for boodle members is to dedicate future money to your Money Market accounts and maintain your current mutual funds and stock holdings. Boodle will spend the year attempting to identify a buying opportunity that we expect will present itself in the late fall or early winter. You should remain disciplined and patient as these events start to emerge.
Boodle will do all that it can to get the most up to date information to you as soon as we can. Never forget that investing is not as easy as it looks sometimes, but always know that we are passionate about understanding the market, and we are very thankful that you trust us to help you as you journey on your path to financial freedom, insight and understanding. Stay safe, and we will see you back here next month.