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Just over a month ago, we released our top 5 investments for 2022. As the year moves forward, with an exciting January on the books, we’re starting with our first update of our top 5 investments. These five investments, Energy Transfer (ET), Exxon Mobil (XOM), Palantir (PLTR), Facebook (FB), and AT&T (T), are expected to outperform the S&P 500 (SPY) through 2022.
The performance of our recommendations versus the S&P 500 is tracked below.
For each month, the tracking is based on the YTD performance (i.e., February will be from Jan. 1 to the end of February). The aggregate performance of the 5 investments (equally weighted basket) was -3.12% versus a 7.49% decline for the S&P 500 implying a one-month outperformance of 4.37% versus the S&P 500.
Obviously, one month is too short of a time to get a true metric of performance, but it’s a useful time to start.
Inflation Concerns and Macroeconomics
The most significant concern in the markets currently is inflation, which has reached roughly 7%. One side argues that the issue is a temporary supply chain issue exasperated through issues such as a shipping container shortage, or ports around the country struggling to move goods into the country. As the supply chain adjusts to changing demand, it’ll need to adjust.
The second is that loose Federal monetary policy and rising wages will propel increased demand and spending which will cause permanent inflation that will last long after the various supply chain issues resolve themselves. Regardless of whichever camp you fall into, or whatever your opinion is, we expect 2022 to be the year of truth.
In our view, inflation is fairly transitory caused by three issues.
The majority of shipped goods come from China. China has instituted a Zero-Covid policy with frequent lockdowns, which expands the difficulty of moving goods. Combined with enormous demand and the price to ship a container of goods has become 10x versus the pandemic. That’s not based on economics or the government, it’s a short-term spike.
Similar to the shipping issues, consistent lockdowns are unpredictable, and unpredictability is horrible for the supply chain. Several countries in Europe have started to move towards a “no lockdown policy”, and over the next 1-2 years, we expect global countries …….