Remainder of 2022 Predictions
Welcome all new subscribers to Alpha Letter. Every week I write about interesting opportunities in the public market. I focus on stocks off the beaten path. Broken businesses. Assets trading under liquidation value. Macroeconomics and where the economy is heading. I don’t like investing in large, popular companies and find a fascination with assets no one else is looking at.
Today’s piece will on my market predictions for the rest of the year. Most will be wrong. Some might be right. One prediction is straight out of left field.
But before we get in today’s piece, first a word from today’s sponsor…
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Top Stock Idea
I recently wrote this name up and think the special situation spinoff amplifies the returns. Please see my writeup here.
The Market
The DOW was up almost 11% for the month of October. The Russell was up almost 8%. The S&P 500 was up 5%. Even the Nasdaq inched up 0.5%. I think the market continues to go up from here. Why? I think investors are anticipating a rate cut as high interest rates are unsustainable in an environment with trillions in debt. The only way out of the debt problem is to hyperinflate it away. High inflation and low rates mean high equity prices. Once the cut starts it will be too late.
Inflation
Eurozone inflation came in at 10.7% despite all of the countermeasures Central Bankers are taking in Europe. I’m guessing inflation in the United States hits double digits and continues to move up through the rest of the year. There is too much money in the system. Endless printing and ultra low interest rates are beginning to catch up to us.
Price of oil
$100 per barrel by end of the year.
Best Sector
Going to pick the winner of the year here and race with it towards the finish line — Energy. After the midterms I think Biden stops releasing oil from the SPR and we continue to make new highs for the sector. Energy companies are printing money right now and when more energy companies release Q3 numbers I think more institutions catch on to the undervalued nature of the industry.
Worst Sector
I predict that the technology sector will continue to be the worst performing sector for the remainder of 2022. Almost every tech stock that has reported (outside of Apple) for Q3 has bombed and crashed to the ground. If my prediction that interest rates continue to move up then tech continues to burn down. Another large drawdown incoming for the sector.
Craziest Event
I am going to go full out crazy and predict that Vladimir Putin gets assassinated before year-end. This probably does not happen and if it does I’m guessing my energy stocks get nailed. I do think there are some Russian Oligarchs who want Putin out of office so they can return to their lives on yachts and selling natural resources to Westerners.
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