2022 Outlook Part 1—Tailwinds Shift to Headwinds
The comments below are an edited and abridged synopsis of an article by Michael Lebowitz
The first part of Lebowitz’s 2022 outlook contrasts 2021’s tailwinds with 2022’s growing headwinds. While no one knows what 2022 holds in store for investors, the concern is that it should not foster the same optimism as 2021. The economic and financial environments are shifting rapidly, making the 2022 outlook much more difficult than last year.
Part 2 of the 2022 outlook will cover Lebowitz’s thoughts on the stock and bond markets.
“The more extended the advance, and the higher valuations become, the more stable and promising the investment can appear to be, when judged through the rear-view mirror,” said John Hussman.
Up for discussion: It’s all about growth; covid tailwinds; 2022 headwinds; fiscal spending; monetary stimulus; elections and the Fed; the savings rate; inflation; pent-up demand and mid-life crisis.
In summary: “Prepare for the unknown by studying how others in the past have coped with the unforeseeable and the unpredictable,” as per George S. Patton.
As set out in the 2022 outlook, this year’s monetary and economic environment will not be as friendly for asset prices as last year. While that may seem problematic for investors, we learned in 2020 and 2021 that stock prices can climb a wall of worry efficiently.
In part two of Lebowitz’s 2022 outlook, he discusses how stocks and bonds might perform in the new year.