7 Investments To Avoid In 2022 – Seeking Alpha

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As is almost a yearly tradition, many Seeking Alpha authors dutifully presented their lists of stocks for 2022. Growth stocks, dividend stocks, REITs, you can find a list of your interests on about any topic. In this article, I will present my contrarian take on such lists: 7 investments to avoid in 2022.

#1: Meta

Ever since Facebook changed its name to Meta (FB), the recent limelight for this stock has not been directed on their existing platforms Facebook, Instagram, and WhatsApp, but on their plans for the metaverse. In October last year, I wrote an article about the Facebook metaverse and why I think it is a risky undertaking.

Meta is investing a boatload of money into the metaverse, which currently generates about zero dollars of revenue but might become very successful in the future. Also, Meta is constructing it top-down, while they are competing with many different companies in many different industries. Also, the Oculus which is supposed to be the portal to the metaverse has not been a widespread success until now, which might be an understatement. Last but not least, the reputation of meta as a company and their past behaviors probably make many people skeptical about them playing the key role of gatekeeper in a new metaverse.

But, if any company can succeed in building the metaverse from the top down, it could be meta. Still, I consider the steps this company is taking as very risky, and would not invest any money in meta in 2022.

#2 Meme stocks AMC and GameStop

In 2021, meme stocks were one of the biggest surprises for many investors, including me. For many people it was surprising to view how a Reddit (REDDIT) army could influence the price developments of two companies, GameStop (GME) and AMC (AMC) that were heavily shorted, as can be seen in the following graphs:

Data by YCharts

Graph: price development of AMC and GameStop since November 2020 (Source: YCharts)

As you can see in the following graph, the percentage of outstanding shorts has dramatically decreased in GameStop, but the percentage still has not decreased much in AMC, though it was much lower at the start of the pump of its shares:

Data by YCharts

Graph: short percentage of AMC and GameStop since November 2020 (Source: YCharts)

Still, I expect that share prices supported by memes and not by fundamentals will not last long, and I think that it is very likely that both stocks will dramatically underperform in 2022.