Ahh, another year in the books. 2021 was an interesting year, to say the least. I learned a lot, saw a lot, and appreciated the ride. Now as I sit here thinking about what is already teeing up to be a crazy year ahead, I thought why not try my luck at something new. I will attempt to predict with sheer certainty (ha) what will transpire next year. I’m sure I’ll be way off on everything, so if you are a betting man/woman perhaps bet against me. That said let’s see how NostradAndrew will do in his first-ever prediction.
The Dow will eclipse 38,000.
You heard it hear first gang the Dow Jones will reach an all-time high and eclipse 38,000 for the first time. We’ll see continued growth and spending in our economy, while corporate earnings continue to perform strongly.
The year of international.
I predict that 2022 will be the year we see international and emerging markets flourish. The past few years have been a real outperformance domestically. I believe that 2022 is the year we see diversification really help out as other asset classes fair better than the US. Some due to taxes, and some due to favorable conditions abroad. Another factor is, these countries are finally catching up from economic recovery and we expect the dollar to continue weakening.
Bonds rebound a little.
Bonds have had a tough go at things this year. Low interest rates, coupled with a looming rate increase from the Fed, were a real albatross around their neck this year. 2022 however will see things start to slowly change for the better. Higher bond yields and Fed transparency on rate hikes will lead to a better 2022 than 2021 in the bond market.
Tax rates don’t move much.
Everyone is buzzing about what will happen with tax rates. My guess is with a few Democrat hold-outs and mid-term elections creeping up we won’t see much in the way of increase. At most I think we will see the top tax rates revert back to 39.6% tax rate and nothing substantial to capital gain rates.
Bitcoin bubble burst.
I believe we see Bitcoin value get cut in half next year ending the year under 30,000. I know this is a bold prediction as it keeps increasing, based on seemingly demand, but I am not playing this prediction safe.
Inflation subsides, a little.
Everyone is talking about inflation these days. I have one client in particular, who is certainly reading this, who has been afraid of inflation since the ’80s! That said I think we see the second half of 2022 have inflation more in line with the Fed’s 2-3% target.
The supply chain finally eases.
I predict that the second half of 2022 leads to supply chain normalizing. I think less accommodative unemployment policies, lower demand, and supplies catching up lead to a rosier picture on the back half of next year.
Interest rates increase.
The Fed has already shown their hand that they intend to raise interest rates next year assuming the economy continually rebounds. The question is how aggressively? My magic 8 ball says thank you try again. Now my magic 8 ball says it will increase by a quarter percentage point by year-end.
Unemployment stays low.
I believe accommodative policies will subside and employers will start offering more pay. I also believe a hybrid work environment (if not completely remote) is here to stay. These things lead me to believe unemployment will hover in the 4-5% range throughout all of 2022.
Mortgage rates going up.
We have all benefited from record-low mortgage rates over the past few years. Now, I still think mortgage rates are relatively low next year, but I do think they peak at 4% for a 30yr mortgage. It is important to remember this is still historically really low.
Boy, has the housing market been on fire through the past two years. I predict 2022 things cool a bit. With interest rates increasing, and a lot of transition over the past few years, I believe we will see the housing market prices decrease around 3% next year.
That’s a wrap or a rap?
I figure if I summarize it all with a rhyme that it will be sublime, and leave my predictions with no contradictions, that you’ll keep reading while heading, my advice that is so nice!
Not even sure if that made sense, but I don’t plan to quit my day job. That said, this was a fun blog for me giving you my predictions based on data I’ve read and my ever-growing gut. My last prediction is all you fine people will have the best year yet in 2022 and we will be right alongside you guiding you every step of the way.
From the bottom of everyone at Diversified’s heart thank you for your continued trust, for always sending us more people we can help, and know we are very grateful for every last one of you.
Stay wealthy, healthy, and happy!
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