Here are several top investment hypotheses for 2022 from some of the top investors in the world.
What should you do with these ideas? Do your own research, and if you agree, invest accordingly. If you don't agree, that's okay too -- invest according to your own ideas, not someone else's.
Peter Lynch, the legendary mutual-fund manager and author of One Up on Wall Street, once said: "Everyone has a pet theory that they like to follow. And that's OK as long as you keep in mind that it's nothing more than a theory and you should be prepared to abandon it at any time."
That's sound advice. Remember that these top investors are human, just like you. They make mistakes, they change their minds, they get caught up in the hype, they get nervous, they get excited. The ideas they express today, including these top investment ideas for 2022, may change in the future. Invest accordingly.
Hypotheses 1: The global economy is slowing, and that will hurt equities.
Value investor extraordinaire Ben Graham once said, "In time of panic or extreme pessimism, the true value of a security will not be determined by intrinsic value but by the anticipation of future cash flows discounted at a relatively high rate." It's important to remember that while stocks are risk assets -- they can lose money in bad times -- they also offer investors access to higher returns than bonds do. If you think the economy is going downhill with no clear end in sight (and many people do), then it stands to reason you'd want to stay away from risky assets like stocks.
Value investing legend Warren Buffett has made some famously successful bets on troubled companies when their shares were cheap during periods of economic turmoil. In fact, he says: "I have checked our records since 1965 and find that at least 65% [of our gains] came from dividends or splits rather than price appreciation... And I am confident those figures are conservative."
In other words: The stock market may fall along with everything else during recessions and bear markets but rebounds quickly when things get back on track. A recession does not equate with permanent destruction of value for companies; it's merely an interruption in business as usual for them until things improve again. While no one can predict exactly how much equity values might rise or fall over time based on overall changes in corporate profitability around the world, it doesn't hurt your portfolio balance if you own some quality dividend-paying companies through thick and thin markets alike (instead of just focusing on trying to pick individual winners).
Vanguard founder Jack Bogle has advised investors for decades now: Invest carefully across low-cost index funds instead of trying to chase individual investments where there are thousands available already trading today plus more coming every day. The S&P 500 index contains large U. S.-based corporations such as Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Alphabet (NASDAQ:GOOG).
Owning these simple index funds covers almost all publicly traded U. S. shares. Dividend investors (who typically want to benefit from the long-term rising trend in equity valuations over time) can get access to a basket of equities at no extra cost -- just buy an S&P 500 index fund and you'll be well diversified.
Hypothesis 2: The wall between traditional finance products like banks and fintech players like PayPal is falling.
Fintech is the new buzzword in banking these days. But what does it mean? To put it simply, fintech companies are using technology to make everything from payments to wealth management (where you save money for retirement and other long-term goals) easier, cheaper, and more efficient. Traditional financial institutions like banks have been around a very long time -- centuries! Yet they're now being challenged by tech giants like Alphabet's Google or PayPal Holdings (NASDAQ:PYPL). These digital disruptors aim to offer better services at lower costs than traditional banking products and programs do. Fintech has become a $2 trillion industry already in 2021 alone according to research firm IDC; by 2030 that could swell all the way up to $22 trillion.
In 2022, expect this trend of fintech disruption continuing as well with more consumers switching their bank accounts from brick-and-mortar banks like JPMorgan Chase & Co (NYSE:JPM) or Citigroup (NYSE:C) over to online banks such as Ally Financial Inc (NYSE:ALLY), Capital One Financial Corp(NYSE:COF), or even PayPal itself thanks mostly because of convenience factors rather than cost savings per se on account fees for checking accounts etc..
Hypothesis 3: The U. S. market will continue to outperform the rest of the world in 2022, and that's why you should be investing there.
Eurizon Capital founder Michael Hintze believes that political uncertainty has been weighing on markets around the globe for years now; investors have basically been waiting for a resolution to all these uncertainties before they start investing again, but with no clear end in sight yet until perhaps 2022, this trend could continue for some time more yet. While the U.S. stock market did well after bottoming out during the Great Recession (as mentioned earlier), most major economies around the world are still far from where they were at their highs before 2008 (and some may never recover from those losses).
The European Union is still struggling to form a unified fiscal policy as it tries to emerge from its own recessionary struggles since 2009 as well due mostly to Brexit and other issues affecting various members of its member nations like France, Germany, Italy, and Spain among others too numerous here to list right now. These types of problems have weighed down stocks globally even though U. S. equities seem higher today than they've ever been in history overall!
While there's no such thing as a sure bet in the stock market, if you follow these four macro trends, you'll be well on your way to more successful investing decisions. What are some of the key trends you're watching right now? Feel free to share them with us and our readers below!
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