Investment Stab 2022 Stock Market Predictions

Last year we made a list of 4 stock market predictions. 

Investment Stab 2021 Stock Market Predictions

So we will first review our predictions, then go over our 2022 predictions.

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Review of 2021 Stock Market Predictions

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1. US Stock Market Will End 2021 Higher (Correct)

The US stock market, represented most accurately by the S&P500, posted a total return of 28.7% for the year 2021.

The majority of that gain was from the increase in the index price, rising from $3764 to $4766. 

2. STI to Stay Flat for the Year (Wrong)

The Straits Times Index (STI) returned 9.7% in price appreciation, meaning a more than 10% total return if we were to include dividends.

That's anything but flat.

So we are wrong on this one.

3. Air Travel Will Recover (Wrong)

Well, we did not expect Omicron at the start of 2021, so I guess we got this wrong.

But, air travel did recover - slightly, given that there's more travelling now than a year before. 

Just that it is far from what we had expected - a near-full recovery.

Because we expected a recovery, we predicted that SATS will reach $5 by end of 2021.

That did not happen, SATS is still hovering at where it was a year ago, ± $4.00, though it closed 31st December 2021 at $3.89.

4. SIA Will Not Pass $5 By End Of 2021 (Technically Correct)

Singapore Airlines Limited (SIA) closed on 31st December 2021 at $4.99.

If we're thick-skin enough, we would say we got it right.

But it did break above $5/share in 2021, only to drop back due to Omicron.

Conclusion: 1.5/4 correct

I would say our prediction for the year 2021 kind of sucked, just like our personal stock picks for the year 2021.

2021 is probably just not our year 😥.

We get this wrong often, but our goal is to post our thoughts, views, predictions, and review them 1 year later to see which part in our analysis and thought process went wrong.

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So here comes our 2022 stock market predictions!

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1. US Stock Market Will End Higher in 2022

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Based on historical data, the probability of a US stock market ending higher in a given year is 70%.

So by saying the market will end higher, we are 70% likely to be correct 😉.

However, the market can be up a lot (like last year), or up a little.

We predict that this year, it will be up a little (think less than 10%) because it's the second term of a US president, which tends to have muted returns for the stock market.

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2. Amazon & Microsoft Reach New Highs

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Disclaimer: I own shares in both of these companies.

My bet on these 2 companies reaching new highs is mainly because of my cloud bet.

Amazon owns AWS and Microsoft owns Azure, the 2 biggest cloud providers in the world.

As we continue to go digital and move the workload to the cloud because of Covid and work-from-home (WFH) arrangements, cloud usage will continue to grow at high growth rates (30%+ per annum).

What better way to capture that growth than to invest in the top cloud providers, especially since scale is extremely important in the cloud business.

PS: my personal bias is Amazon simplify because, with its stock price at USD3,000, there is potential for a stock split which would just make the share price more valuable than what it is currently worth (aka Google).

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3. STI to Rise Sharply for the Year

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Last year we predicted the STI to stay flat for the year because 40% of the STI weightage is in banks (DBS, UOB, & OCBC).

And because the US Fed Chairman had stated at the start of the year they will keep rates low until 2023.

A low-interest-rate environment is bad for banks' profitability, hence we did not think banks will do well, and hence STI will also not do well.

However, this year, the US Fed Chairman has announced it will do several rounds of rate hikes to curb rising inflation.

We expect this to boost the banks' profitability, leading to higher bank share prices, and thus higher STI prices.

We expect STI to rise more than 10% in total returns for the year.

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Conclusion

These are our predictions of what we think will happen in 2022.

We are not 100% sure we will be correct.

But we do think we probably will not be too wrong.

As always, do your own research, due diligence, own analysis, and invest according to your risk appetite.

We are not giving you recommendations, just our predictions.

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