Every year, when you look back to see what performed, the most striking feature of the market is its unpredictability. The markets choose winners in ways that only surprise investors.
2021-2022 was a year where predictions fell to the dust and favourites failed to fire. As we enter a new financial year, the markets are back to their most favourite business of predicting winners. Invariably, most predictions arise from strong recency bias. Investors want their winners to continue their dream run. But, their shifting nature of market preferences is not going to favour continuity. Changing macroeconomic metrics, rising inflation and tenuis global investment flows will throw up new winners in sectors that the markets don’t expect to perform.
Some years are not just unpredictable, they can also be unproductive. The stock markets may end up doing nothing even when the economy does reasonably well. One gets a sense that 2022 will be such a year when the economy looks much better, but the markets don’t reflect that strength. Such years are meant to be utilised as opportunities to consolidate your investments, scale up your portfolio and prepare for the long run.
2022-23 promises to be a year of heavy lifting for discerning investors.
