Happy New Year! The best New Year resolution you can make is to have no New Year resolutions for 2022 at all. In any case, has anything other than the calendar year changed so far? If you have not yet sobered up from the year-end festivities, a look at the headlines since the start of 2022 will do the job for you.
The pandemic, the Ukraine conflict, Evergrande, oil supply disruptions, Turkey policy jitters… don’t they know it’s 2022? But as you probably know, we do not give in just because the going gets ever tougher. Instead, we invite you to take these issues (and the fact that they do not seem to go away) as a test of resilience. And we remind you that this is what investors get paid for, i.e. holding on to risk assets before everybody else sees the blue sky. As for blue skies: this is when it gets really dangerous, as investors get light-hearted and central banks stingy. So let us be happy: there is plenty to worry about; in this first edition of 2022, we deal with the issues one by one, as always.
The key concern
But before we do, and as a special service to our esteemed audience, we boil down an extensive survey by a major financial news service to the bare minimum. The topic was consensus expectations for 2022 by global financial institutions such as ours. In a nutshell: consensus sees inflation as THE key concern, expects tighter policies and higher interest rates, and sees valuations as stretched overall. Then consensus agrees on environmental, social, and governance factors being ‘extremely important’ this year but is completely fuzzy on how to deal with the matter. And it sees digital assets as ‘no established portfolio asset yet’. No euphoria here either.
Conclusion for investors
So let us cherish the fact that there is hardly any ‘irrational exuberance’ to be felt either in the news or among global investors. This is an excellent starting point to a hopefully rewarding and prosperous year 2022. And to those banking on major corrections in risk assets (which admittedly can happen any time) we simply would like to highlight that they rarely occur after stellar returns of the sort witnessed in 2021 (see number of the week). So stay confident, please.
Number of the week