Alpha Portfolio: +19.7 (in 2020 it was +40.2)
Innovative Tech: -7.5 (in 2020 it was +57.8)
My Trade Ideas: +78.3 (in 2020 it was +181.4)
Crypto Portfolio: +637
Total: +181.8% returns
✨ Welcome to 2022!
- Set those year-to-date return calculators back to zero — and let me know what industries you’re watching this year by emailing me email@example.com 📝
📢 All portfolios for this month have been updated. Please login to the app and check it out.
🚨 Lastly ... Thank you: I appreciate your engagement and feedback.
7 key takeaways
- 22 ideas and predictions for 2022
- We have played on the offence for 6 years, it's time to play defence
- 2022 might be the year of the 'wise' investors
- As interest rates rise, don't expect big returns from the stock market
- Housing sector may outperform stocks this decade
- Crypto will be multidimensional in 2022
- Top 10 stocks for 2022
21 Life Lessons from 2021 for 2022 and beyond... 🧵— Abdul Samad Ali (@asamad_ali) January 1, 2022
1) 22 ideas and predictions for 2022
For the last few years, I always end up spending the last week of the year reading as much as I can on current trends to make a roadmap for the coming year. This serves more as a rabbit-hole to go down which then leads to multiple investment opportunities for myself and the investors.
Here are some interesting ideas and predictions for the coming year which I will write more about as they develop.
- Uranium will finally get 'Green' rating across Europe. This will further strengthen the bull-case for it being 'Clean Energy' that institutional funding can get behind.
- Lithium is at an inflection point. Lithium battery costs have dropped 98% over the last three decades. The metal is critical for Electric Vehicle batteries but is environmentally damaging to extract. This will push the industry to find green alternatives.
- How safe are we online? As working-from-home is the 'new normal', cyberattacks remain a growing concern. This year, hackers may show that it’s possible to get control of private data, infiltrate corporate networks through weak WiFi networks employees use at home to hacking parts of smart devices at home and even smart cars. The consequences are likely to be catastrophic. I anticipate companies in the cybersecurity space will see increased growth in revenue.
- AI in Healthcare will lessen the burden on an already under-staffed industry. Increasing AI adoption will decrease burnouts among medical professionals.
- Psychedelic medicine may boom like cannabis industry did two years ago. It has the potential to reverse the epidemic of mental illness that is impacting our world.
- Manufacturing and supply chains will be reshuffled in South-East Asia. Vietnam in particular looks primed to capitalise in the wake of recent free trade agreements. I have a trade on Vietnam in the portfolio this month.
- Goldman Sachs predict a +9% gain for S&P 500 in 2022. S&P 500 hitting $5,000 was my target for Q4 2021. However, I believe we will reach that price by Q2 2022.
- Based on bitcoin cycles, Crypto-winter (crash) is likely in Q3/Q4 2022.
- Inflation in US should remain above 3.7% this year.
- Decentralised Autonomous Organisation (DAO) will become as hyped as special purpose acquisition companies (SPACs) in 2022.
- Apple and Microsoft will hit $3T market-cap.
- Web3 and Metaverse will be the dominant narrative in the Crypto-sphere.
- Attention-economy: companies will look to influencers and content creators to reach target audience.
- Approximately 10% of the corporations across the world will accelerate their moves toward a more digital future by going fully remote.
- Boom in home building and home improvement sectors as house purchases have increased year-on-year throughout the pandemic.
- As we move forward in the digital age, Virtual reality (VR) headsets will now let people play games and burn calories in the process. Who needs a gym membership?!
- Space race 2.0: Virgin Galactic, Blue Origin and SpaceX plan to send more passengers to space. This is just the beginning and I don't believe the markets are pricing in space exploration industry over the coming decades.
- Chip in the brain: Elon Musk's company Neuralink, hopes to test its device in human brains, to enable people who are paralysed to operate a computer.
- Twitter gets bought by another company. Jack Dorsey is more interested in using Twitter rather than growing the company. Twitter is a gold-mine! It seems the company has not yet realised it's potential but it does have a bright future ahead.
- Flip-phones are cool, again! You can never quite figure out the trends in the mobile industry. From Erickson to Motorola to Nokia to Blackberry to... this is research, I am not that old. With the release of Samsung ZFold, it seems we will see return of 'flip-phones' due to advancement in Bendable Electronics and Sensing Technologies (BEST).
- Tech-ethics: In the ever expanding metaverse(s), ethics will never have been so important for the tech industry. Questions like “Do we want to continue spying on billions of people?”, “Should we treat our employees like humans?”, “Is it okay for male avatars to grope female avatars?”, “Should we continue providing technology to authoritarian governments?”, “Is working for the military really what this company should be doing?”
The answers seem obvious, but maybe that’s just me.
- Possibility of a recession in Q4 2022. See chart below with 44% as a threshold to determine high possibility of recession. The 10-year Treasury yield curve is also reflecting a slower growth outlook into this year. Further flattening (or worse, inverting) would spell trouble for the stock market.
2) Where are the markets going?
Many of the bubbly “stay-at-home” plays that led the market in 2020 have deflated, with declines of 50% or more.
Meanwhile, expectations for higher interest rates have triggered a reversal in high-multiple growth stocks that might not be over.
The best trade is one where we are on the side of the Fed by remaining cautious ahead of rate hikes. This year, the 'wise investors' will outperform, one's who have decades worth of experience and have seen multiple economic regimes before. It is not the time to chase big gains, but defend our portfolio against the losses.
We'll invest cautiously, one quarter at a time and constantly reassess our positions on a weekly basis.
3) Charted Territory
Market Sentiment: Bearish to start off the first week of 2022.
Economic Regime: Stagflationary pressures build up as market signals deflation.
What this means: Growth and prices are more likely to drop.
What this means: We can see that the economic tide is turning as we enter 2022. We are likely to see moderate rate of growth as investors seek shelter in safe-havens.
– Real Estate (XLRE)
– Consumer Staples (XLP)
– Materials (XLB)
4) Crypto Wild West
Crypto will be multidimensional in 2022. There is a strong need for specialisation among experts in each field. The days of “being in crypto”, knowing everything, are numbered. There's going to be verticals for:
- Investment horizon (seed vs growth)
- Sectors (gaming guilds, DAOs, etc.)
- Narratives (CeFi vs DeFi)
We have seen an increase in funding from Crypto funds in 2021, going from $3.1 billion in funding for year 2020 to $15 billion through Jan-Sept 2021 (source: CB Insights).
A 4x increase, that’s excluding the new inflows in Q4 2021 after Facebook unveiled its plans for the Metaverse. We are seeing large investors, like Softbank, Singapore Gov Wealth Fund (GIC), Alphabet’s Capital G and many more who have raised their investment allocation in the digital-assets space.
The institutions are here to stay. In 2017, most of the market participants were retails chasing dreams through ICO scams. In 2021, newer market participants have significantly larger funds and usually hold for longer periods. This institutional buying wave of Bitcoin started in April 2021 just when retail lost interest in it; perhaps rotated into alt-coins. This will continue to change the way selected digital assets behave.
For example, Bitcoin is increasingly held by corporate treasuries like Saylor’s Microstrategy (it’s almost like a stock trading as a Bitcoin ETF), Macro investors like Stanley Druckenmiller, Ray Dalio, Paul Tudor Jones and the first country to use Bitcoin as legal tender: El Salvador. These institutional investors will buy the dip as opposed to retail investors who will panic-sell the lows.
For these reasons (and more) we remain invested in this space with a recommended portfolio allocation of 5% - 10%. I have a detailed update on Crypto coming out soon.
5) Top 10 stocks for 2022
Keeping the macro outlook and the tailwinds of Roaring 20s in sight, I have identified these 10 as the best candidates to outperform the market this year.
- Amazon (AMZN)
- Alphabet Inc. (GOOG)
- Berkshire Hathaway (BRK.A)
- IBM (IBM)
- Visa (V)
- Royal Dutch Shell (RDS.B)
- Dow (DOW)
- Verizon (VZ)
- Walgreens (WBA)
- Coca-Cola (KO)
Note: This is based on the data I have available as of January 2022, without having access to a crystal ball.
That's all for now.
For the rest of the year, I'll navigate you through all the opportunities and challenges that 2022 undoubtedly has in store for us.
Have a great week and I wish you all a best start to the new year!