It’s been a crazy year for the markets. And I expect 2022 will be no different.
But before I get there, let me recap and shed light on my previous predictions for 2021.
After a slowdown in 2020, the economy has roared back to life in 2021.
The recovery happened so fast that the global supply chain couldn’t keep up.
This caused inflation to surpass everyone’s expectations. And that led to a shift in market leadership.
Stocks from cyclical sectors like energy and semiconductors rallied while pandemic stocks like Zoom and Peloton faltered.
I expected a recovery and a market leadership change. But not to this magnitude.
Plus, I didn’t see crypto becoming mainstream so quickly.
That explains why my predictions for 2021 were on point initially but didn’t hold up as the year progressed.
Last year, I outlined four scenarios I saw playing out in 2021.
- First, I predicted the U.S. dollar, the world’s reserve currency, would remain weak.
This turned out to be true until June, when it hit a double bottom.
Since then, the dollar has shown strength in part to rising interest rates.
- Second, I predicted Chinese stocks would outperform U.S. stocks during the year.
During the first few months after my prediction, Chinese stocks’ gains were double that of U.S. stocks.
But then the Chinese government doubled down on its antitrust rules. This has caused China stocks to suffer for the majority of the year.
Meanwhile, U.S. stocks have gained 30%.
Hmm. Maybe capitalism works, after all.
- Third, I called for biotech stocks to have a great year.
After starting the year strong, they haven’t kept up with the rest of the market. This is in part due to the speculative nature of the industry.
Investors moved out of the speculative corners of the stock market, holding down biotech in the short run.
- Lastly, I predicted small-cap stocks would outperform large-cap stocks.
Since the prediction, the performance has been pretty even, with large caps slightly ahead.
But small-cap stocks are still doing well. They’re up 24% over the past year and continue to edge higher.
It’s a good time to check out Ian’s newest presentation on small caps if you haven’t already.
Looking forward to 2022, I have two major predictions.
Crypto Will Double in 2022
First, the crypto market will continue to grow exponentially.
I see it doubling to $5 trillion in 2022.
Crypto’s market cap has already more than tripled since the start of 2021.
(Source: CoinMarketCap.)
The rapid growth came primarily from smaller altcoins, which helped Ian King’s Next Wave Crypto Fortunes subscribers lock in several gains well above 1,000%.
With the value of the crypto market sitting at $2.6 trillion, there is still plenty of room to run.
The combined value of the global stock and bond market is a whopping $240 trillion. This means crypto’s market cap is only 1.1% of that number.
As retail and institutional investors’ interest in crypto continues to grow, more money will flood into the space.
And there’s plenty of money out there.
Just look at what happened in the stock market.
By September, stocks already had seen over $1 trillion in inflows in 2021. That’s more than the past 20 years combined.
Plus, the U.S. M2 money supply is now north of $21 trillion. This means there’s plenty of money that still needs to get deployed.
I expect a good chunk of this money will make its way into crypto.
Real interest rates should be negative for the foreseeable future in most countries.
In other words, inflation is higher than the return you can get on “risk-free” bonds.
To make money, investors must buy assets that offer more upside potential.
This will bode well for crypto.
I’m Still Bullish on Small Caps
My second prediction is that small caps will have a strong year.
I know, I know. I said that last year.
But here’s why I’m still bullish on small caps — specifically, small-cap growth stocks.
First of all, the 24% gain from small caps over the past year is slightly misleading. Not all small caps have done that well.
Most of the gains came from value stocks. Growth stocks have traded sideways for the majority of 2021.
(Source: Bloomberg.)
The gap in performance resulted from the market’s preference for cyclical stocks that were trading at cheap prices.
These stocks typically fall under the “value” category and benefit from a recovery in the global economy.
But after their 34% rise this year, small-cap value stocks are now fairly priced. And buying “value” stocks at higher prices defeats the purpose of trading them at all.
As I mentioned before, there’s $21 trillion in idle cash in the U.S. alone that has to go into assets with upside potential.
Other than crypto, small-cap growth stocks have the most upside.
The Russell 2000 Growth Index should see 280% earnings growth over the next 12 months.
Despite the strong forecast, the index is only up 14% over the past year.
This means the stocks have some catching up to do.
After a slow 2021, I expect money to flood into small-cap growth stocks, sending the index 30% higher in 2022.
There Are New Opportunities Every Day
Strength in cryptos and small-cap growth stocks are my prime expectations for 2022.
But the market hands us new opportunities every day. This is why it’s critical to stay informed.
Fortunately, the Winning Investor Daily team has your back.
As we head into the final month of the year, we’re focusing on the hottest tech and investing mega trends.
So, keep checking BanyanHill.com every day for our experts’ insights.
Regards,
Research Analyst, Strategic Fortunes
Morning Movers
From open till noon Eastern time.
ImmunityBio Inc. (Nasdaq: IBRX) is a clinical-stage immunotherapy company that develops cell and immune therapies to treat cancers and infectious diseases. It is up 20% this morning on the news that Australian biotech EnGeneIC has chosen ImmunityBio to manufacture and commercialize its nanocell tech to be used against infectious diseases like COVID-19.
Vir Biotechnology Inc. (Nasdaq: VIR) is a clinical-stage immunology company that develops therapeutics to treat and prevent serious infectious diseases. It’s up 13% after H.C. Wainwright raised its price target for the stock on the idea that the omicron variant could fuel higher demand for Vir’s COVID-19 antibody therapy.
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Federal Home Loan Mortgage Corp. (OTC: FMCC) is up 9% this morning after the Federal Housing Finance Agency released its breakdown of the conforming loan limits for 2022. It showed that Fannie Mae and Freddie Mac will soon provide guarantees for mortgages close to $1 million thanks to the past year’s sharp rise in home prices.
Petra Diamonds Ltd. (OTC: PDLMF) engages in the mining, processing, sorting and sale of rough diamonds in South Africa. It is up 7% today after completing its reverse stock split.
AbCellera Biologics Inc. (Nasdaq: ABCL) uses its full-stack, AI-powered drug discovery platform to find antibodies that can be developed as drugs. It is up 6% this morning as investors bet on the company’s trial-phase antibody treatment that is capable of neutralizing viral variants of COVID-19.
BHP Group (OTC: BHPLF) is a metals and mining company that is up 5% today. The company has no news of its own to report. Rather, it is up on the misfortune of one of its competitors that lowered its guidance for iron ore production.
Novonix Ltd. (OTC: NVNXF) develops and supplies battery materials, equipment and services to the lithium-ion battery market. It is up 5% today but has no significant news to report.
Anglo American Platinum Ltd. (OTC: ANGPY) engages in the production and sale of precious metals like platinum and gold. The stock is up 4% today being driven by the movements in the commodity markets for various precious metals as inflation and COVID-19 concerns fuel uncertainty.
Harmony Gold Mining Company Ltd. (NYSE: HMY) mines, produces and sells gold, silver, copper and other metals. It is another precious metals stock that is up 4% thanks to the movements in the commodity markets.
