The Year that wasn’t vs The Year to be

Grab your cup of coffee whilst we take a deep dive into what happened during 2021. I’ll be posting parts, and here’s the first.

We take a deep dive into the best tech stocks for 2021.

The best tech stock was Fortinet in the S&P 500, which grew by 150% year to date.

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Fortinet’s flagship product was the FortiGate firewall, which combines security and networking features for customers. The company’s third-quarter revenue was 33%, with product revenue up 52% and billings up 42%. With awareness increasing around security while networks closely converge. This should be one on your watchlist for 2022.

Nvidia was second on the list, which rose by 137% yearly. It became the most valued semiconductor company by boosting its valuation by $750B - ironically, that’s twice the competitor’s Intel and AMD’s combined value. The boost is owed to providing parts to cloud computing companies and banking on every key trend in the semiconductor world like cryptocurrency mining, AI, EVs and the metaverse.

The chip shortage also led to Applied Materials and KLA rally by 89% and 70%.

Gartner was up by 109% this year; Gartner’s surge reflects widespread anticipation of a continued acceleration in enterprise technology spending as the world emerges from the pandemic.

Alphabet, the parent company of Google, rose by 69% due to the advertising business’s strong growth.

Any stocks that you think I may’ve missed out on? Post them below!

Why Meta, Amazon, and Zynga Are Baird’s Top Internet Stock Picks for 2022

Terming the Internet as the “menu of opportunities” for 2022, Baird Analyst picks Amazon, Meta and Zynda as the top picks for the upcoming year. “Investors remain focused on shorter-term trends, near-term comps, and macro influences, more than on longer-term secular growth drivers,” adding on “While we generally prefer companies with large TAMs [total addressable markets] and strong engineering capabilities, we are also factoring in near-term growth comps and margin trends.”

Meta is poised to outperform 2022 as the company’s overall market share in online advertising is increasing, and new segment reporting spotlights margins in the company’s core business. Though Metaverse seems to be a long project, the returns may not be reflected on an immediate basis.

Sebastian said that Amazon likely would have easier growth comps and the potential to leverage recent investments. Amazon’s Web Services (AWS) could also be well-positioned to address the growing need to spend on cloud services. According to a few analysts, the company invests back into the business to increase, and the profitability is well below its long-term potential. Hence the traditional P/E metrics are not applicable; the stock is therefore valued on an enterprise-value-to-revenue ratio. Amazon is also expanding beyond its core public cloud to solutions that support on-premises configurations and IoT along with other projects. With e-commerce, AWS, Digital Media, advertising, Alexa and more, the stock seems to have a long way up!

Zynga is reported to lack organic growth and headwinds in customer acquisition. Still, the analysts believe the stock has a few tailwinds like ramping up monetisation of mobile and cross-platform games with a change in Apple’s App Store policy. The stock has limited risks to its current growth and margin expectations.

Sebastian highlighted other bargain stocks include Corsair Gaming, Vroom, Playtika Holding, and Alibaba Group Holding. His splurge stocks were Airbnb and Shopify.

Tomorrow, I’ll post the broad outlook for 2022 and the year in rewind 2021.

Large quantities of memory, processing power, and high-speed connectivity will be required in the Meta world. The semi-conductor and data centre sectors will benefit greatly from this. In-memory computing will be crucial, and it appears that Google, Micron, TSM, and AMAT are all involved. Micron and TSM may collaborate on the development of specialised chips for in-memory computing, with Google handling the design. This is a little conjecture based on connecting the dots and other publicly available data.

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The Year that wasn’t vs The Year to be:

2021 had a lot of liquidity in the market coupled with Fed, Inflation, tapering and the stimulus package that expired. The liquidity led to high IPOs and various cryptocurrencies have a bullish year. Home prices increased and REITs are reported to perform better than S&P 500. The Work From Home situation led many people into towns/suburbs. With liquidity and cheap credit, people bought homes and sales continue to grow despite reaching 34 year high.

There’s quite less job participation, the rate is currently 61.8% owing to early retirement, some people still cosying themselves up and some doing side gigs thinking that would be enough. Read this quote somewhere “The pandemic has caused a mental shift in people, who have come to realize that life is too short to be stuck in a job you hate.”

Some companies suffered due to the supply chain crisis while some cruised over it, suggested including the likes of Bloomberg that Forget Finance, Supply Chain is the pandemic-era must have MBA degree. Making me ponder the Majors that I am about to select. The simple problem is the current Supply Chain focuses on cost reduction and having Just in Time inventory. With China’s dominance which led to the sudden shocks, people are rethinking the dependence and are trying to diversify.

Here’s the outlook for 2022:

The Fed accelerates the tapering process, which will conclude in March 2022, resulting in decreased levels of liquidity in the economy.

The Fed raises rates, with three more expected in 2022, bringing the Fed Funds rate to 0.75 percent to 1%. (from 0 percent to 0.25 percent currently)

Inflation is expected to persist for at least two more quarters, owing to supply chain bottlenecks.

GDP is forecasted to increase at about 3.8% p.a. for the US in 2022 and 4%+ p.a. Globally.

Well Enough Macro Talk, let’s jump straight into Equities.


S&P Heat Map - Source: Finviz

With many companies releasing the funds that they had to hold up for an unforeseen COVID wave, the operating earnings increased significantly coupled with an increased level of buyback and dividends.


Source: Yardeni Research

Due to unforeseen events, the percentage of earnings fell sharply as many companies kept the money for unforeseen circumstances. Many banks released the money during the last quarter of 2021, let’s hope the trend continues for the companies in 2022.

S&P sectors

Energy was the top sector for the past year. Real Estate came second, as people moved to suburbs this was bound to happen. Technology did great due to Big Tech.

2022 Outlook for Equities

JP Morgan’s estimate for the S&P is 5050 that bullish owing to the fed tapering, pick companies carefully. As investors seek income sources to offset reduced capital gains, dividend equities are likely to resurface. Investors will be looking for a dependable source of income as the working population changes, with more retirees and family members remaining at home.

I read that these might be areas of interest for investors:

  1. REITs
  2. Financial - Do well in times of rising rates.
  3. Healthcare - It is booming and you already know why

Outlook for Bonds and Equities:

Bonds are expected to be out of favour in 2022, as yields increase and bond prices fall.

A combination of labour shortages, supply chain interruptions, and weather abnormalities has pushed agro prices upward. Food inflation isn’t going away next year, and while prices may moderate slightly, they won’t fall dramatically.

The majority of analysts remain positive on energy and commodities in general. Precious metals (gold and silver), on the other hand, have a pessimistic prognosis. They underperformed in 2021, and most analysts predict that trend would continue in 2022.

IPOs were already covered in a separate thread. [Invested in an IPO? They're selling off right now - Like Crazy]

That’s all for now folks! Happy Investing!

Here’s another outlook for 2022 covered in a separate thread.
Vanguard Says Investors Will Need Value And International Stocks In 2022 - What’s Hot :fire: - Vested Community