2022 is the year of the singles hitter
In these extreme market conditions, we tactical managers use a consistent process to poke around looking for one of two things: market segments that have potential to extend their existing upside momentum, or areas whose prices have been pushed down further than is warranted. And if there’s one thing that characterizes Wall Street these days (other than the usual hot air and useless advice on the part of many big-firm commentators), it’s how highly “correlated” the stock market is. So many zigs and zags together.
It doesn't matter what market segment you buy. If it’s part of a class investors consider to be "risk-on" investments, it’s likely to move several percentage points in either direction (or both) in a single day. So, in this market climate, you take what you can get. Or as an older member of my family once said, "you get what you get, and you don't get upset." So, I am not upset to take tidy short-term profits in 2022, rather than hold out for some type of homerun situation. To continue the metaphor, this is the year of the singles hitter.
There are opportunities, but they happen very differently than they did in the bull market we had for about 12 years prior to about a year ago. We are always looking for how to make money, rather than looking for the "right time" to be invested in the stock market. If there was even an environment in which outright market-timing and algorithmic trading strategies are likely to run into trouble, you are looking at it, right now.
To us, investing is never black-and-white. So, at a time when our indicators point to high risk, we don't abandon our offense entirely. Instead, we look for ways to play offense in a way that can pursue profits in an up market, but also "lose less" or even make money as a "flight to safety" for equity investors if things get worse.
That, plus a solid defense, allows us to not only defend, but exploit bear markets in stocks and bonds. This market environment makes everything a "rental" and not something we expect to own for years. That leads us to expand our “opportunity set” of strategies, investment segments and tactical approaches to making money in 2022.