FNArena’s Weekly Insights – November 29 2021
In this week’s Weekly Insights
-2022 Looks Familiar, Though Not Quite The Same
-December Index Watch
-Conviction Calls
-Research To Download
-FNArena Talks: All-Weathers
-Hendrik Bessembinder, Unsung Hero
-All-Weather Model Portfolio
2022 Looks Familiar, Though Not Quite The Same
By Rudi Filapek-Vandyck, Editor FNArena
This might come as a surprise to many readers, but, reading through investment strategy reports for 2022 and listening to funds managers on webinars, there is far more agreement than disagreement among the world’s experts about what is likely to occur in 2022.
Global growth is slowing, and will continue to decelerate. Inflation will peak soon, and then start descending. Central bank policies become less accommodative. Bond yields are trending higher. And the world will have to start living with the virus and its multiple variants, with bumps and set-backs along the way.
Where disagreement kicks in is in the speed and timing of these events.
Questions like: when exactly will the yield on the US 10-year government bond reach 2% and at what speed? can momentarily become very important for a market that at times feels like it wants to have that big correction so many investors are fearful of.
Equally important: so many portfolios are positioned for re-opening borders and re-flation, but those trades have become crowded and volatile as also witnessed by share prices in Webjet ((WEB)) and Flight Centre ((FLT)) and the like; even before omicron announced itself.
At the index level, the Australian share market has effectively been in a moribund state since the second half of the August reporting season. And our two largest sector constituents -banks and iron ore producers- have been directly responsible for it. Investors can thank China and a disappointing banks reporting season.
At the smaller end of the market, things have soured quickly for stocks that enjoyed widespread popularity not that long ago. The likes of PointsBet Holdings ((PGH)), Codan ((CDA)), Bapcor ((BAP)), Damstra Holdings ((DTC)), Nearmap ((NEA)) and Appen ((APX)) have all been testing how much pain can be inflicted on shareholders without them capitulating and selling out (though many would have, by now).
Year-to-date the Australian market (ASX200 plus dividends) is still up more than 14%, which would be seen as a positive outcome in most calendar years, in particular given the many question marks and potential challenges that are on investors’ minds.
