For everything 2021 was for me trading stocks, 2020 wasn't.
While I anticipated a trainwreck coming in SPACs, I didn't top tick it. Few ever do. Like many others, I waited for an obvious top to come into view, but tops never come into view after you are on your way back down. I didn't give back all of 2021's crazy gains from SPACs, but the losers were in 2020, while the winners mainly lived in 2021. A few late year squeezes eased that pain, but SPACs weren't a welcoming trading environment for the better part of 2021.
In general, individual and small-cap trading lacked excitement, especially in the fourth quarter. The tiny names I had high hopes for fizzled in the second half of the year. The early part of the year allowed for solid profit-taking and big gains, however, as we head into 2022, I'm left to ponder which of my billion-dollar bets will even survive. That's a stark contract from a year ago. In the first part of the year, virtually the entire list caught fire. The second half of the year proved out that the fire was a dumpster fire.
The only positive I can take from that, and, yes, it's a stretch, but a good many small-cap and microcap stocks have been decimated over the past several months. The laundry list of names I traded or watched closely in 2020 because they presented opportunity after opportunity turned into 2021 trainwrecks. The potential lost of easy money won't help matters much in 2022 either. It is possible folks held over 2020 winners into early 2021 before they sold for gains, so the end of the year selling has been for tax planning purposes. Definitely possible but we won't know for sure until we see how the early half of January trades.
Still, simply because you sold in late 2021 for tax planning purposes doesn't mean you'll buy after 30 days have passed. Many of the smaller companies now have stock charts that are broken. There's a good chance a former investor will take a second look and decide, nah, I'm going to find something with a stronger setup. For companies that were forced to raise money on the way down or at the bottom, they may have a wall of underwater secondary offering holders that are happy to exit breakeven. That could stymie rallies as well.
While 2020 was the year of the speculator, 2021 was the year of the Passive Index Investor and Mega-Cap holder. That was not something I predicted nor anticipated, but that's also what makes a market a market. If we could all predict everything coming, then it would likely never come because we'd be anticipating what was to come and pushing it there because its time.
Over the next week, we'll all be making our predictions for 2022. That's what we do. Whether they are accurate or not isn't the most important thing. Okay, accuracy matters, but making predictions is a great exercise to understand your mindset heading into the new year. I'd write them down. It might help if you identify a particular bias you hold. That can matter because that bias may drive you toward an emotional trading decision later in the year. If you are aware of it, you may be able to avoid making an emotional rather than a logical decision in 2022 and save yourself from a bad trade.