| 10 Bold Stock & Crypto Predictions for an Even Wilder 2022 Welcome to the end of the year, folks – and what a year it has been for both stocks and cryptos! Heading into the final trading day of 2021, the S&P 500 is up about 26% on the year, marking its fourth best annual performance in the past 20 years. Bitcoin did even better, rising over 60% in 2021. The Dow outperformed the Nasdaq for the first time since 2016, as investors rotated out of high-flying tech stocks and into beaten-up value stocks. But underneath the headline numbers, there was a lot of volatility. High-beta stocks got crushed. A record number of “rug pulls” occurred in the crypto market. Covid-19 variants sent airline, travel, and retail stocks on wild swings. Natural gas made a huge comeback while solar took a break. The bond market had some of its most violent swings of the past decade. The U.S. Federal Reserve did a hard 180-degree turn on its all-important monetary policy stance, and fiscal spending in D.C. has been log-jammed. In other words, while the headline numbers on Wall Street were great this year, the trading action was fast and furious. Perhaps some investors are hoping for a calmer 2022, as Covid-19 risks abate, inflation cools down, and society finally gets back to a more “normal” state. For those investors, we have some bad news: 2022 will likely be faster and even more furious. But not in the same way that 2021 was fast and furious. In fact, we think 2022 will be fast and furious in the exact opposite way that 2021 was… I know that’s difficult to grasp, so let’s check out 10 of our boldest predictions for both stocks and cryptos in 2022. 
1. Consumer spending will fall flat. Consumer spending was robust in 2021 for a number of reasons, namely the following: 1) Consumers had a lot of pent-up demand to unleash after being locked down in their homes for much of 2020, and 2) consumers were able to save a whole bunch of money during the pandemic. Both of those factors are gone now. Pent-up demand has been exhausted, and the household savings rate in the U.S. exiting 2021 is below where it was before the pandemic (it spiked during the pandemic). With the savings rate crashing and consumers on the heels of a spending surge, we see consumer spending slowing meaningfully in 2022. 2. Covid-19 risks will meaningfully abate. Yes, omicron is spreading like wildfire. But the stats on the variant are actually a long-term positive, as omicron is proving to be much less severe than previous variants. This means the virus is mutating in a way that is making it more contagious but less severe – which also means it is mutating in a way that makes it less of an economy-stopping threat to society. In most countries, the era of lockdowns will become a thing of the past in 2022. We believe society will continue to move toward a more “normal” state next year. 3. Global supply chains will be restored. The biggest economic positive of the retiring of lockdowns and restrictions in 2022 will be the restoration of supply chains, which have been severely disrupted in 2020 and 2021 by restrictions that have led to production shortfalls and labor shortages. We fully expect supply chains throughout the globe to come back to near 100% capacity by mid-2022. 4. Inflation will fall below 2% by the end of the year. Inflation is running red-hot right now because of a huge, global supply-demand imbalance. Consumer demand is robust, and supply is short, which is pushing prices higher. But consumer spending will slow meaningfully in 2022 (see prediction 1) and supply chains will come back online in a big way (see prediction 3). Therefore, today’s supply-demand imbalance will balance itself out in 2022 – leading to a situation where inflation cools dramatically. We expect the global supply-demand dynamics to improve throughout the year, creating a situation wherein we exit 2022 with core inflation rates below 2%. 5. The Fed will not hike rates three times. The Fed is currently forecasting three rate hikes in 2022. That forecast is based on the assumption that inflation will remain well-above 2% next year. That won’t happen. Inflation will dip below 2% by the end of the year. Amid a rapid deceleration in inflation throughout the year, this historically ultra-dovish Fed will do very little to adjust monetary policy. We believe the Fed will hike rates once or twice – and believe it is somewhat likely that they don’t hike at all. 6. Long-duration Treasury yields will remain very low. Most investors believe the 10-year Treasury yield will rise above 2% and make a run toward 3% in 2022 as the Fed hikes rates. But, as stated above, we don’t see the Fed hiking rates all that fast. Consequently, we don’t see the 10-year Treasury yield moving higher by all that much. We think the 10-year Treasury yield will finish 2022 in the 2% to 2.5% range, and numbers closer to 3% are very unlikely. 7. The S&P 500 will rise 5%, and Bitcoin will rise 100%. On the assumption that corporate earnings growth remains healthy – but not vigorous – in 2022 and that the Fed maintains an exceptionally supportive monetary policy, our valuation models indicate the S&P 500 will rise a rather pedestrian 5% next year. On those same assumptions, our valuation models show that Bitcoin has the potential to make a run toward $100,000. With reason, we believe Bitcoin is a far better investment than the S&P 500 for 2022. 8. There will be an “altcoin wipeout.” Despite our Bitcoin bullishness, we do believe that if the Fed hikes rates even just once, you will get a wipeout in the altcoin market. This wipeout will result in a bifurcation in the altcoin market. On one side, highly speculative altcoins with no fundamental value will crash toward and remain at zero. On the other side, strong altcoins with significant fundamental value will take a hit, and then rebound big. By the end of 2022, we suspect this second group of strong altcoins will feature multiple 100%-plus winners – but in the process, the first group of weak altcoins will get wiped out. 9. High-flying tech stocks will soar once again in 2022. High-flying tech stocks were market darlings in 2020 – and indeed, have been market darlings since 2010. However, they got absolutely crushed in 2021 amid red-hot inflation and sharply rising Treasury yields. We believe both of those dynamics will pass in 2022. As they do, high-flying tech stocks will rebound with vigor as their still-strong earnings growth trajectories converge on what are now heavily discounted valuations across the space. We’d be big buyers of beaten-up tech stocks right now. 10. Last on our list of predictions is a simple, yet patently bold one: That is, these four tech stocks could soar by 100% or more next year. In summary, we think that 2022 will be fast and furious like 2021 – but in a completely different way. This year was characterized by strong consumer spending, red-hot inflation, rapidly rising yields, a value rotation, and big gains across both stocks and cryptos. Next year will be characterized by weak consumer spending, cooling inflation, sluggish yields, a growth rotation, and big gains concentrated in the crypto space. But, let’s worry about that on Monday… For now, we’d like to wish you a Happy New Year! From all of us at InvestorPlace, we wish you all the best in 2022. May the stock market and crypto market gods smile fondly on your fortunes next year. Until then, enjoy the night, and enjoy the weekend!
Sincerely, | 
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