Our Annual Markets Forecast

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To the Editor:

The evidence is overwhelming that economic forecasts are rarely, if ever, useful because to make money off them, one has to make a prediction that is nonconsensus; otherwise it would already be priced in (“Don’t Expect Big Returns From the Stock Market Next Year as Interest Rates Rise,” Cover Story, Dec. 17).

As Peter Lynch said, “I deal in facts, not forecasting the future.” I am going to continue my strategy of buying equities that are trading for far less than they’re worth regardless of where interest rates or West Texas Intermediate crude oil ends up in 2022. In other words, I don’t chase themes; I let the deals come to me.

Chris Bentsen, on

To the Editor:

As to companies with pricing power being havens in an inflationary environment, only those with unique products and growing addressable markets typically have this luxury.

I will look to Nvidia, Microsoft, and Apple to meet these measures rather than consumer staples with undifferentiated products, where consumers can downshift to generic brands. These three companies should also hold up well in a rising interest-rate environment where interest costs are inconsequential.

Richard DeProspo, on

Helpful Views

To the Editor:

Here is my annual analysis (“Here Are Barron’s 10 Top Stocks for the New Year,” Cover Story, Dec. 17). Our model portfolio, with $10,000 invested equally on each recommended stock for a total of $100,000 on the day of last year’s recommendation, returned (with dividends) 24.51% compared with S&P 500 index at 26.35%. It is slightly off compared with the benchmark.

However, this is not bad compared with Barron’s annual forecasters. Dubravko Lakos-Bujas at J.P. Morgan forecasted the S&P 500 at 4440, closest to the S&P 500 at 4621; some of these seers were way off their forecasts. Saira Malik at Nuveen was close to the forecasted 10-year bond rate at 1.4% but far off from S&P 500 forecast at 4050. As Warren Buffett famously said, “Forecasts may tell you a great deal about the forecaster.”

These pundits may not be at the target, but Barron’s attempt to get the big money’s view helps us draw our conclusions for the following year.

Sreeni Meka, on

Zulauf’s Prediction

To the Editor:

In “Stocks Stumble as Fed Speeds Up Stimulus Phaseout” (Up & Down Wall Street, Dec. 17), Randall W. Forsyth notes that when the five biggest tech names that dominate the S&P 500 index finally gave way, the major indexes did, too. But many stocks were already giving way. According to Trading Diary in the Market Laboratory section of Barron’s, the past four weeks in the New York Stock Exchange and the past five weeks in the Nasdaq each ended on a Friday with stocks having more new lows than new highs compared with the previous Friday.

Is this a forerunner to a prediction given to Forsyth by Felix Zulauf, a former longtime member of the Barron’s Roundtable: the S&P 500 crashing to 3000 due to tighter dollar liquidity (rate hikes, etc.) before soaring to 6000 when authorities move back to stimulate to stop the selling panic?

Ron Minarik, Mystic, Conn.

To the Editor:

I remember the runaway inflation of the 1970s-80s with rates of 15%. It took the Federal Reserve and Paul Volcker four years to curb that “transient” inflation. The Federal Reserve is always right, but nine months to five years late to the party. I once had a boss like that. Terrified to make a mistake, if asked the temperature and weather, he would consult 37 thermometers, ask 20 people at the National Oceanic and Atmospheric Administration, do numerous studies, stall, ask for more data, then reassess, then contemplate. After three feet of snow and 10 degrees, he would proudly state the obvious. That is the Fed, analysis paralysis personified.

B.J. Khalifah, Grosse Pointe Park, Mich.

Living With Covid

To the Editor:

Vaccinations have become a political football (“Omicron Could Be the Start of a ‘Viral Blizzard.’ Brace for a Challenging Winter,” Dec. 17). It’s sad that Covid-19 vaccines aren’t as widely accepted as those for polio, etc. With 50 million Americans unvaccinated, this virus will be around just like the yearly flu-like virus. We will have to learn to live with it just like we do with the flu.

Lawrence Reese, on

Kelly Ann Shaw’s Voice

To the Editor:

In “China Is Racing Ahead to Lock in Asian Trade. Time to Worry,” Other Voices, Dec. 3), former Trump administration official Kelly Ann Shaw correctly describes the woeful state of American standing in the Pacific vis-à-vis China. She correctly identifies our failure to join key Asia-Pacific trade agreements (which all of our “allies” in the region have joined) as an enormous blow to our ability to influence the direction of corporate and civil governance in the region. We are now reduced to picking up “consolation prizes” in the form of relatively unimportant “trade deals.” In short, we are the losers.

But I ask Shaw this: Where was your voice (and that of anyone in the administration) challenging President Donald Trump’s disastrous decision to thumb his nose at these trade agreements? Indeed, where were her objections to the insulting trade wars leveled at all of our allies by the Trump administration? We now face two enormously powerful enemies (China and Russia) without any of the robust alliances forged over generations. They were thrown away with contempt by the previous administration. The timing could not have been worse. Where was Shaw’s voice when it mattered?

Peter Wolf, Sedona, Ariz.

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