This is, as money manager Barry Ritholtz noted last week, the most forecasty time of the year, with Wall Street analysts looking into their crystal balls for what's in store in 2022.
Right now, strategists appear to be in more muted mood than usual. The average forecast envisages the S&P 500 will end 2022 around 4,900, a gain of just 4 per cent from today’s levels.
Two of America's biggest financial institutions, Morgan Stanley and Bank of America (BofA), are especially concerned, predicting market falls in 2022.
BofA is "bearish", warning of a "rates shock" that will result in 2022 being a time for capital preservation. There are, says BofA's Savita Subramanian, "a lot of similarities between today and 2000 – the tech bubble peak".
Morgan Stanley says stocks are already looking shaky. The median S&P 500 stock has already corrected 15 per cent but the index is being kept aloft by the 15 biggest stocks, which now account for 40 per cent of the index. Of course, other strategists are more bullish, although none of Wall Street’s major investment houses are pounding the table for stocks. Stocks have gained 25 per cent in 2021; the consensus among analysts is that investors shouldn’t expect a repeat performance.
