5 Bold Predictions for 2022 | The Motley Fool

In this week’s edition of Industry Focus: Financials, we take a look back at the stock market predictions Fool.com contributor Matt Frankel made in December of last year and see how he did. And then, Matt and host Jason Moser discuss his 2022 predictions and why he thinks they have a good chance of actually happening.

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This video was recorded on Dec. 13, 2021.

Jason Moser: It’s Monday, December 13th. I’m your host, Jason Moser, on this week’s financial show. Well, folks, 2021 is just about a wrap. For those of you who’ve listened for a while now, you know that one of my favorite shows to do is my partner in crime’s preview of the year to come. That’s right, folks. Its certified financial planner, Matt Frankel, and his count of five bold predictions for the stock market in 2022. Matt, what’s going on?

Matt Frankel: Not much, it’s a beautiful, but a little chilly day here in South Carolina, but pretty nice though. I see a Christmas tree behind you?

Jason Moser: Yeah.

Matt Frankel: It’s festive everywhere.

Jason Moser: Let’s get in the festive. It’s nice. I think that weather is contagious. It’s up here too. It’s nice, it’s a little chilly, but it’s starting to feel like Christmas, which is nice. I’m excited for the holiday season. Hope everyone else out there is too. Matt, much like the Masters’ kicks-off spring in Augusta, your five bold predictions to me really do tell us that the new year is upon us. I always enjoy going through this piece because I’m always learning something new from you, but I just enjoy the perspective. I like the bold nature of the predictions. As you say, they are not meant to all come true maybe, because they’re bold predictions, but nevertheless, it seems like you have a good time putting this list together.

Matt Frankel: They’re really bold predictions, but not so bold, that they’re not going to happen. They are things that could possibly happen, but not the most likely.

Jason Moser: Well, let’s talk about the plausibility then, because as we like to do, we hit Rewind and look at your 2021 predictions and how that has unfolded. About a year ago, we did another show like this where we talked about your bold predictions for 2021. As we get the show kicked off here, let’s talk about those 2021 predictions and how that’s gone so far.

Matt Frankel: Yeah, for whatever reason, I only made four predictions in 2021. Maybe I wanted to give myself a chance of going 50-50. Maybe that’s what was going on. Here, I’ll go through them one at a time. Number 1, I predicted that the economic reopening of the US will be quicker than anticipated, especially in regards to vaccine availability. Remember at first, a lot of people thought we wouldn’t have widespread availability to October, it was going to take to the fall before anyone could get a vaccine. That turned out not to be the case, it turned out to be earlier than anticipated. I think it was by May in most places, where you can just walk in and get a vaccine whenever you wanted to. That made the economic reopening happen quicker than expected. A lot of people didn’t think everything was going to essentially reopen by the summer last year, and it did. I call that one a success in terms of prediction.

Jason Moser: I agree.

Matt Frankel: Number 2, it’s a little bit not as black and white here. Number 2, I predicted that the reopening stocks would outperform the S&P 500. Generally, that has been the case. The S&P is up by about 25 percent year to date. Most reopening stocks have had a good year. Hotel stocks have done really well, a lot of the real estate stocks, we talked about the retail basket that’s done really well, but I specifically called out some stocks that happened to underperform. I specifically called out, Empire State Realty, the office REIT, which office space is still up in the air at this point, Delta Airlines is what I called out that underperformed. Reopening stocks as a group outperformed, but the ones that I called out other than Simon Property Group, which destroyed the market, haven’t done so hard. I’ll call that one a 50-50. I’ll call that neutral.

Jason Moser: What about number 3? Because this was like you said, it was like the George Constanza of bold predictions, right?

Matt Frankel: Number 3, I was clearly wrong.

Jason Moser: Yeah, it did the opposite.

Matt Frankel: Yeah, I predicted the S&P would decline, the reason being the S&P has gotten so top-heavy with companies like Apple, Microsoft, Google, like making up so much of your index. I thought those companies would have a rough year during the reopening. I was wrong. Apple is about to hit a three trillion-dollar market cap for the first time ever. As an Apple shareholder, I’m not that mad about it, but my prediction was wrong.

Jason Moser: The emotional hedge. What about number 4?

Matt Frankel: Four was oil. I predicted oil would be over $70 a barrel by the end of the year. At the time, that was probably the boldest prediction on this list. I think oil was something in the 40s when I made that prediction. People were saying we’re going to have cheap gas and cheap oil for a long time, but right now, it’s just over $70. I’ve spent 71.50 as I’m talking.

Jason Moser: Yeah.

Matt Frankel: With a few weeks left in the year, it’s too early to call that one. But so far, it’s definitely headed in the right direction, especially being how low it was when I made the call. I feel good about that one.

Jason Moser: Yeah, I think it makes perfect sense. I would give it to you, but I appreciate your integrity there. We’ll wait till the end of the year, but either way, I think even if it’s just slightly below, I’d at least give you a half. It’s what you have.

Matt Frankel: That was probably the boldest out of the original four.

Jason Moser: Well, OK. Let’s go ahead and talk about 2022 here because it’s December 13th. We’ve only got really just a handful of days here left in the year and 2022 is just going to get ready to get started here. What are your bold predictions for 2022?

Matt Frankel: These are in order from least bold to most, I guess, you would say. Number 1 is that value stocks are finally going to start to outperform growth stocks.

Jason Moser: Oh, man, I would love for you just to go ahead and tweet that out after we get done taping, and just watch all the growth investors just descend on you.

Matt Frankel: It’s pretty bold. Over the past decade, growth stocks have doubled the return of value stocks as a whole. Like the Vanguard growth ETF versus the Vanguard value ETF, it’s been about doubled the total return over the past decade. In most individual years, growth has outperformed. I just think that value stocks have generally a lot more to gain and the market is tiring of these high valuations.

Jason Moser: Well, it feels like we’re seeing a little bit of that rotation now when you say it. That I know it’s a buzzword rotation out of once like a little bit of reality the matter is, that is what happens. You see this bigger picture interest shifting from one sector of the market to another. There is a rotation out of growth into something else and it does feel like what you’re saying there. Maybe there is some more interesting value.

Matt Frankel: There’s a lot that can cause it. For example, when interest rates rise, it makes investors think twice about the high-value growth stocks.

Jason Moser: Right.

Matt Frankel: Things like that. I just think that the growth stocks have had their moment at this point, but I thought that last year, that’s the one that I got wrong. I think this year might be finally the time for value.

Jason Moser: Well, we will obviously be paying close attention to that. What about…