Statistics argue that a year as strong as this one has been will finish strongly. The crop of 2022 projections is beginning to arrive, with some holding forth for a muted or negative performance by the broad market, and others more optimistic, in the face of what will likely be ongoing easy monetary policy. There are a lot of imponderables, including elections that may reshape the U.S. political landscape; but we see little appetite for fiscal restraint on either side of the aisle.
Indeed, there are a lot of geopolitical imponderables. We have been watching escalating tensions on the border of Belarus and Poland, where the pariah government of Belarus has weaponized migrants to strike back at European sanctions. The government of Poland recently announced that it would be doubling the size of its military. The ongoing energy crisis hands significant leverage to Russia, who has again been moving forces to the Ukrainian border. On the other side of the world, we suspect that the visible geopolitical weakness of the current administration could encourage Chinese aggression towards Taiwan, perhaps after the conclusion of the Beijing Winter Olympics in February 2022. And everywhere, as food prices spike around the world, we remind readers that the momentous events of the Arab Spring and the migrant crisis they sparked all derived ultimately from unrest over rising food prices.
The ballyhooed COP26 climate conference in Glasgow ended with a whimper as China and India refused to accede to the demise of coal. As other nations, including European nations, face an energy shortage deriving both from rising demand and from the premature shuttering of politically incorrect energy sources, ideologues may continue to receive a dose of unwelcome reality, because… winter is coming.
Amidst all this, technology provides an existential oasis. So much in the world seems not to be working, and often, our tech is the only thing that seems to work seamlessly.
Tech and tech-adjacent growth themes remain front and center for investors as well. Not everything is worth chasing at any price — but investors should continue to focus on enduring disruptive tech themes in healthcare, financial technology, artificial intelligence, business digitization, and other areas, and wait for volatility to buy.
The emerging inflationary and negative real-rate environment is good both for gold and for cryptocurrencies. For those who do not wish to hold crypto, or cannot, they could also hold crypto-related stocks such as Bakkt (BKKT), Coinbase (COIN), or some of the exchange-traded funds devoted to the digital transformation of money and finance. If you want to know more about these, please feel free to contact us.
We would not be surprised to see apparel retailers who can secure inventory do very well over the next few months.
Thanks for listening; we welcome your calls and questions.
Please note that principals of Guild Investment Management, Inc. (“Guild”) and/or Guild’s clients may at any time own any of the stocks mentioned in this article, and may sell them at any time. In addition, for investment advisory clients of Guild, please check with Guild prior to taking positions in any of the companies mentioned in this article, since Guild may not believe that particular stock is right for the client, either because Guild has already taken a position in that stock for the client or for other reasons.
