2021 ~ What a Volatile Year

The market observations for today –

1. 2021 was another exceptional year for U.S. equity markets if you invested in the index/select few stocks.
2. S&P500 is closing the year with +29% gains while ARK Innovation ETF is down 23%. This is how complex the market has been this year.
3. Has Bitcoin replaced Gold for new-age investors? Gold prices have slid 4.4% this year, the largest drop in percentage terms since 2015
4. Will there be an equity market crash in 2022? – It means a market decline of more than 20%. History suggests that such events happen at 5-year intervals. Since the sell-off of huge magnitude happened in Feb-March 2020, one can hope that nothing bad will happen so soon.
5. It has been a record year of buybacks (helped by Low-interest rates + Strong earnings). S&P 500 Q3 2021 buybacks were $234.6 billion, up 18.0% from Q2 2021, up 130.5% from Q3 2020.
6. Two sectors that delivered stunning returns this year: 1. Oil&Gas/Energy Up 55%; 2. Real Estate stocks Up 44%
7. Why are strong Oil and Gas prices not driving up Exxon Mobil XOM stock prices? The stock is available at a dividend yield of 5.72%
8. Does the market believe that Oil and Gas prices will not surge in 2022? Some estimates suggest that the U.S. oil production is poised to rebound next year, and that would disrupt OPEC’s market dominance
9. Source of worry right now: How fast Omicron Variant is spreading + It’s impact on Supply Chain and Inflation
10. A large-cap breakout that worked: ICE Intercontinental Exchange. It’s up 10%
11. What a comeback in Himax Tech HIMX
12. The damage in some growth stocks has been catastrophic. Example: DKNG
13. If one lesson you should learn in 2021: Stop Loss matters. Just see what happened to DIDI after it gapped down.
14. Home Prices are on fire and homes are selling like candies but that does not make the stocks associated with the trend an automatic buy. Redfin RDFN, a real estate broking firm, has terribly disappointed its investors this year. 
15. “What seems too high and risky to the majority generally goes higher and what seems low and cheap generally goes lower.” ~ William O’Neil

Trade Sheet:

Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers