December 09, 2021

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TOGETHER WITH

Good day to you! With big tech stocks rallying well past the $1T valuation mark, can you guess which big tech CEO sold the most stock (by the number of shares of their company) in the first half of 2021? a. Tim Cook, Apple CEO, b. Mark Zuckerberg, Facebook (now Meta) CEO, c. Sundar Pichai, Google CEO. Follow the 🌊 below for the answer.

Today's topics:

Where's the market headed in 2022?
Employee expectations are evolving—"the great remodeling"
Set yourself up to worry less about money

Forward this Gist

INVESTING

Where's the market headed in 2022?

The ability to speculate about the future is perhaps both the biggest blessing and the biggest curse endowed upon our evolution. While it enables us to plan ahead and mitigate risk to forecast the future, it can come with a lot of work, feelings of satisfaction, unmet expectations and even failure.

The stock market is quite possibly a direct manifestation of this, because it's all about investing money today for a better tomorrow. Naturally, this leads us to wonder what the future of the markets may hold, especially in times as uncertain as these.

Different opinions, no certain answer

Major banks, analysts and economists love forecasting the future of the market, and understandably so. It's kind of fun, and even more so when they're right. Nevertheless, these predictions almost always come without any consensus.

Bank of America and Morgan Stanley, for example, are both a bit bearish on 2022. BofA projects that the S&P will finish the year flat, around 4,600 points, which would be a 0.7% gain on the year, and MS expects 4,400, representing a -3.7% decline.

Other players like Goldman Sachs and JPMorgan are more bullish, with GS forecasting the S&P 500 to finish around 5,100 (up 11.7%) and JPM coming in a tad below at a 10.6% growth projection.

Per usual, no one knows.

2022 and its variables

So, while we understand it's impossible to know for certain what the market will do on any given day, let alone a year, what we can do is account for the variables we can reasonably expect to be a factor, and then make our own assessments.

Interest rates: We've seen over 20 months of substantive support from the Fed in an effort to prop up the economy during the pandemic, and the uncertain times that have followed. That's expected to come to an end soon, with rates having nowhere to go but up next year. This will undoubtedly impact the market, and different sectors will react differently.
Inflation: Maybe the top story of 2021, it will likely continue to be a relevant concern throughout 2022 as well. Inflation threatens stocks because it usually precedes rising interest rates, which is a contractionary policy no matter how necessary. As we've delineated numerous times, inflation often has an "it's complicated" relationship with the markets. And it's a variable that could have a big hand in next year's markets.
Earnings: Earnings are expected to continue to rise next year while we also expect GDP to maintain somewhat of an elevated growth rate before tapering off in the coming years. Analysts expect S&P 500 earnings to grow 7.9% in 2022, compared with an estimated 49.3% growth in 2021, according to I/B/E/S data from Refinitiv.
Covid variants, rising labor costs, labor shortages, general shortages, tax code changes and we could go on. The market is a social sentiment machine, and with this many metaphorical irons in the economic fire. All it takes is one domino to fall to start seeing a lot of red. Expect continued volatility.

CAREER

The great remodeling of the workplace

It's reasonable to say that this shift we're seeing in the US jobs market was waiting to happen, even long before the start of the pandemic. A sort of swelling of potential energy seemed to have been building for a while among workers, and it finally started to spill over amidst the global Covid predicament.

In July, August, and September, over 4 million people resigned each month culminating in the record 4.4 million in September⁠—the highest resignation rate recorded. All the while, over 10 million positions remain unfilled, so what gives?

"The great remodeling"

Traditionally, there's been a balance of power and a hierarchical dichotomy present between the employee and the employer, and it seems that many Americans are growing weary of it, or at least the way it's been treating them. The social contract between businesses and their employees is being audited.

There are countless statistics we could use to represent this. Like, 54% of consumers living paycheck to paycheck, 85% of men and 66% of women working 40+ hours per week, 46 million Americans saying they can't afford quality healthcare, Millennials being unable to afford to have children, and the list goes on.

It's a situation where the anecdotal evidence and personal stories make a bigger impact than a number though, and learning more about individual experiences can often help us realize just how complex this disconnect is. And it'll probably require a not so simple solution.

The solution is under construction

Unfortunately though, a lot of these inequitable living situations aren't even due to selfishness or naiveness on part of the employer. Many smaller to mid-sized businesses simply can't afford to do more than they already are, even if they wanted to.

Most workers aren't asking for a Marxist-type economy structure or anything extreme, but are simply trying to find a little more breathing room in their working arrangements. It's a time of frustration both on the part of many business owners who want to find a way to do better, and employees who want to find better.

As the cost of living goes up, automation continues to take on more jobs, and the barrier to entry keeps rising as college degrees become increasingly common, the common worker is being crowded out in a new way. The first step to solving a problem though? Recognizing we have one.

MONEY MINDSET

Set yourself up to worry less about money

Giphy by Rewire.Org

For better or for worse, in the world as we know it, money is in everything. Our lives seem to revolve around it sometimes and it can serve as a major stress point.

Oftentimes though, one of the best ways to reduce stress and fear is through habits. Establishing healthy routines that protect us from uncertainties and risks can provide the security we need to overcome our worries, and empower us toward financial freedom.

Plus, the only thing to really fear is fear itself, right?

A few practical tips⁠—some obvious, some not:

Know your foundation. What's the minimal amount of money you need to survive? Knowing this can make you a lot more aware of what money factors are driving stress.
Set small, specific and realistic goals. Small wins matter and can be the motivation you need to keep going towards your wealth goals. But, make sure they're realistic and achievable too.
Develop your mindset. If you have a contentious relationship with money, try to base your thinking from a place of gratitude and abundance. Make it a daily habit to be open and positive—it'll broaden your thinking.
Think of money as time spent. Each time you consider making a purchase, convert that transaction total into the number of hours you'd need to work in order to make it back.
Substitute a bad habit with a good one: Yeah, life would be boring without some bad habits. And it's probably unrealistic to cut them cold turkey. Try what's called "substitution" instead. Example: Every time you make an Amazon order for a non-essential item, put $5 into your savings account.

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📊 ASHU'S CORPORATE CORNER

Today's Movers & Shakers

GameStop (-4%) saw its losses grow from $18.8 million a year ago to $105.4 million
Lucid Group (-6%) announced a proposed $1.75 billion offering of a convertible senior note
Rent the Runway (-9%) reported wider-than-expected losses
Restoration Hardware (+11%) after sales and profit beat estimates
CVS (+2.2%) raised upbeat guidance as it launches new healthcare services and insurance business within their drugstores
Hormel (+1%), the food producer, topped the street on revenues and profits
Apple won an appeals court decision on delaying changes to the App Store that stemmed from its dispute with Epic Games
FuboTV (+2.8%), the video streaming was upgraded to overweight by JPM Securities

This commentary is as of 9:00 am EDT.

🌊 TRENDING ON FINNY & BEYOND

Answer. It's Mark Zuckerberg, Facebook (now Meta) CEO who sold 7.1 million shares of $FB or $2.2 billion worth of stock in the first half of 2021. Tim Cook, Apple CEO sold none and Sundar Pichai, Google CEO sold 27K shares worth $62.5 million (Visual Capitalist)
📅 US inflation figures (CPI) for the month of November will be released tomorrow, FYI (BLS)
Finny lesson of the day. This bite-sized lesson is for those of you starting to think about saving for retirement—why now & why it matters:

Saving for Retirement & Why It Matters

Retirement Planning

8 mins

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