Year in Review + '22 Predictions
Looking back at a tough year and what I'm thinking for 2022
Year in Review
2021 was my first year writing with the intent to share my thoughts and findings of the market and individual stocks and I’m glad many of you have found value within the content I post. Instead of posting all my commentary on the individual names I made posts about in this article, I decided to put it all in a doc so you can refer to it at your leisure. Note that the doc is super high level and is more of a summarization rather than a deep dive.
In the meantime, I wanted to give some stats for Cedar Grove Capital for this year.
I wrote 36 articles, not including this one, which is almost one a week based on when I wrote my first post.
Of the 36 articles, 17 were initial coverage reports on single name stocks. 6 were Short and 11 were Long.
I covered names in the pet, cannabis, crypto, tech, vertical farming, CPG, and apparel spaces.
I know for certain that I will get reamed for making predictions but I feel that there are some things that you just have to voice now for a potential future “ah-ha!” moment later on. Historically, Scott Galloway has been utterly destroyed for his predictions and now that I’m writing them I kinda see why it’s nerve-racking.
Anyways, my predictions are not on the single names in my portfolio but rather macro trends/events that I’m hypothesizing could occur in the new year.
#1 S&P 500 returns single digits, at best
Given the stellar 2020 and 2021 returns the S&P had, I don’t believe that it will roll over into 2022. With growing fears of new variants with COVID, FED potentially raising rates, and a too hot market that needs to be cooled down, I think the S&P could, at best, see single-digit returns next year. I really think we could have a flat, to negative year but will predict a 0%-5% return for 2022.
#2 FED to raise rates 2x, conditionally
I think the biggest buzzword of 2021 was “transitory.” The FED, as well as myself, thought that inflation would indeed be transitory as supply chains would ease and goods would travel more smoothly. Obviously, this was not what happened and inflation rose to 6.8%, the highest since 1982. With the most recent FED meeting, I believe that they will raise interest rates at least twice next year if inflation does not curb on its own from the announced reduction in QE and I believe we might see rates rise from 0.25% to 0.75% (two, 0.25% increases).
#3 High growth tech will feel pain
With near-zero rates during the pandemic, tech stocks soared over the last two years with the Nasdaq up ~23% YTD. However, I believe that the shift from growth to value is just entering the end of the beginning. More dollars from investors will shift from highly speculative, no-earnings, tech stocks to more stable, earnings-generating value stocks.
#4 Bitcoin to $100k?
Another one of the biggest talked about predictions of 2021 was that Bitcoin was going to $100k. People swore on their firstborn child that Bitcoin would hit that price by the end of the year. Well, unless that happens in the next 72 hours, it’s not hitting it. But when it comes to 2022, I think Bitcoin might come close to but will not hit the $100k mark. No matter what crypto cultists or Cathie Woods said. What’s my rationale behind this? I think people will keep the price from rising too much from pure profit taking and more regulation.
#5 Rivian’s valuation plummets
I’m just going to call it right now, Rivian’s share price can’t hold. It’s not like I have anything against the company, it very well could be the next Tesla, I just think it’s incredibly overvalued for what it currently is. With a burn rate of a few billion a quarter at the moment, they will need to do more equity raises which will only dilute shareholders. With a current market cap of ~$96B, I think with rising rates, further need for additional capital, and a slothy market, the valuation could very well be cut in half.
In 2021, I was merely just posting my research on single-name stocks without treating them as a portfolio. Now, that will change. Going forward, not only will I continue posting my research on names and trends, but I will also be publishing my holdings so you can track my performance so you know I’m not just blowing smoke.
For a full breakdown of what new features Cedar Grove Capital will post and what you’ll get when you subscribe, please click here to take you to my “about” page to see for yourself.
Looking forward to 2022 and continuing to add value to this growing community we have going on here!
One last thing!
I appreciate your continued support of Cedar Grove Capital and always love hearing from you. Please show your support by liking this post and commenting with any thoughts you might have.
If you think someone you know might benefit from this newsletter, please share it with them. If you’re reading this for the first time, consider subscribing below to get actionable insights. It’s free! 👇🏼