As of Nov 17th 2021

The chart shows 20 years of monthly and annualized return data. What's clear is that we have had a great bull run in last 3 years from 2019 to 2021 . The only time we saw 3 consecutive years of double digit returns was from 2012 through 2014 followed by a muted 2015. Can we make history here ? I doubt it

For 2022 the key headwinds are

• Margin compression due to continuing inflation , wage growth , labor shortage and supply chain issues

• Potential Democratic tax law change which can reverse some of the stimulus from $1.2 Trillion infrastructure bill which was passed in Nov-2021

• Debt celling saga during Dec -2021 and budget negotiations

• Fed will start Taper and end around mid June 2022 this ending the greatest monetary stimulus and also potentially rate hike talks will start taking shape although Fed may capitulate on the timing if markets resist

• Resurgence of COVID strain ...though this seems very unlikely

What can benefit the markets

• Infra bill and associated projects keeps jobs humming and consumer demand going.

• China may start looking attractive again for business

• Oil and inflation stabilize

• Europe and rest of world comes out of COVID

What Strategies can work in 2022

I think major indices may not be able to post double digit return but PnL can be generated inn quant strategies - vol targeting, mean reversion, long short etc. Also Factors such as value , size ( small caps) may outperform momentum and meme stock mania. Reach out to GTI for select ideas.