The 'extraction' of profits - by insiders, bolstered by their buyback thrusts, for sure were factors in last year's levitation by a number of mega-cap stocks. Money manager concentration in those issues wasn't illogical (maneuvering of course is easier in high-volume trading vehicles); but it shunned value plays; at the same time setting-up the highest insider selling moves in many years.
The New Year we welcome, won't replicate the last, which was challenging or deceptive in many ways; as S&P and NDX strength obscured underlying soft conditions. We've discussed prospects for next year which remain variable.
One reason they're variable is of course the continued pandemic. 'Hopefully' we won't see more virulent Covid variants after Omicron; but can't bet on that. If however, Delta variant marked the most devastating mortality levels; then it can be uphill once Omicron peaks and subsides, which could be by Spring.
'Mindfulness' .. has us pondering 2022 with hopes most Americans will resist a propensity to be negative about anyone with differing views; and coalesce in ways that realistically are still improbable; especially given Mid-terms ahead.
The palpable unease (not just among investors) is understandable during this extended (and poorly-handled by everyone, with too many presumptions that didn't distinguish a number of professors and epidemiologists). Some surely is legitimate, because the virus mutated (and still likely will but maybe not worse than we've seen); and nobody sane likes any arbitrary rules imposed on them; even if it's wise to adhere to some that are reasonable precautions.
That's also the approach to the market of 2022: 'don't fight the tape' and 'don't fight the Fed'; although despite the Fed's rather clear determination for hiking rates; they also made it clear they won't do so until after tapering ends. When that is becomes harder to determine, and requires evaluation of the pandemic as this continues to evolve.
Overall we expected a bifurcated market a bit opposite of the past year; tough times for the big-stocks with few exceptions; and better times for small stocks, where they have disruptive or superior technology to address modern needs. I think we need to repress a propensity to be negative (human characteristic?), at times; and focus on areas of positivity (other than viral tests ..hah).. since it is the majority of upside plays that make money for folks in the longer-run. At times we've noted spots where it was reasonable to 'fade' market rallies in the big caps; and if we can get a solid move up early in the year; perhaps again in a few weeks. I would distrust any effort to significantly 'bear' the market early.
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