I had all but forgotten about my first column last year, 5 Predictions for 2021, the type that I am loathe to publish. However, I did write it, and therefore must reconcile those prognostications and take my lumps where warranted.
- Interest rates will move higher. Well, I am taking half credit here. While the Federal Reserve did not raise the fed funds rate, it did begin to taper. Part of this prediction was that bonds would suffer in 2021, and that certainly did happen.
- This environment may bode well for precious metals. I was dead wrong here. Despite a big uptick in inflation and another sizable increase in the national debt, gold fell 3% during the year while silver dropped 11%. This should have been a great environment for a big run within precious metals. We'll see what 2022 holds; I am doubling down here for the New Year.
- Value will make a comeback. Value performed very well in 2022 and made up some ground that it had lost to growth over the past several years. The divergence in performance between growth and value was most pronounced in smaller names. The Russell 2000 Value Index (up 25.16%) outperformed the Russell 2000 Growth Index (up 3.17%) by 2199 basis points), while the Russell Microcap Index (up 34.75%) bested the Russell Microcap Growth Index (up 1.01%) by an enormous 3374 basis points. Within large-caps, the Russell 1000 Growth Index (up 28.27%) did edge out the Russell 1000 Value Index (up 25.16%) by 311 basis points, but overall, 2021 was a big year for value.
- Republicans will hold the Senate (referring specifically to the Georgia run-offs). I could not have been more wrong here. Democrats took both Georgia seats and put the Senate at 50-50, with Vice President Kamala Harris giving them the tie-breaking vote.
- No major tax legislation will pass in 2021.President Biden's "Build Back Better" plan, which contained the very aggressive tax law changes that I was referring to, died in the Senate in 2021. Whether a version of it will pass this year remains to be seen.
Overall, this grades out to a C- in my view, and perhaps that is being a generous.