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Will The Bull Market Continue In 2022? How To Invest Now?



  • The S&P 500 has not only fully recovered from the lows of the 2020 pandemic but has added on nearly 45% compared to the beginning of 2020.
  • Will the current bull run continue in 2022, or are we heading towards a cliff? Should you invest now or wait for lower prices?
  • We provide a strategy to invest now to capture most of the future gains while preserving the capital in the event of a correction.
  • Looking for a portfolio of ideas like this one? Members of High Income DIY Portfolios get exclusive access to our model portfolio. Learn More »

2022 wooden numbers with coins on the table

baona/iStock via Getty Images

The last two years or so have turned out to be quite impressive for most stock investors, especially so for passive investors. If you were fully invested simply in the S&P 500 on January 1st, 2020, you have gained roughly

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This article was written by

Financially Free Investor is a financial writer with 25 years investment experience. He focuses on investing in dividend-growing stocks with a long-term horizon. He applies a unique 3-basket investment approach that aims for 30% lower drawdowns, 6% current income, and market-beating growth on a long-term basis and he focuses on dividend-growing stocks with a long-term horizon.

He runs the investing group High Income DIY Portfolios which provides vital strategies for portfolio management and asset allocation to help create stable, long-term passive income with sustainable yields. The service includes a total of 10 model portfolios with a range of income targets for varying levels of risk, buy and sell alerts, and live chat. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ABT, ABBV, JNJ, PFE, NVS, NVO, UNH, CL, CLX, GIS, UL, NSRGY, PG, KHC, ADM, MO, PM, BUD, KO, PEP, D, DEA, DEO, ENB, MCD, BAC, PRU, UPS, WMT, WBA, CVS, LOW, AAPL, IBM, CSCO, MSFT, INTC, T, VZ, VOD, CVX, XOM, VLO, ABB, ITW, MMM, LMT, LYB, ARCC, AWF, CHI, DNP, EVT, FFC, GOF, HCP, HQH, HTA, IIF, JPC, JPS, JRI, KYN, MAIN, NBB, NLY, NNN, O, OHI, PCI, PDI, PFF, RFI, RNP, RQI, STAG, STK, TLT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock. The author is not a financial advisor. Please always do further research and do your own due diligence before making any investments. Every effort has been made to present the data/information accurately; however, the author does not claim 100% accuracy. The stock portfolios presented here are model portfolios for demonstration purposes. For the complete list of our LONG positions, please see our profile on Seeking Alpha.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (44)

Sorry, but I think that's way too many positions for a normal investor to track- let alone someone starting out.
Robert Morie profile picture
@PMJ to the point. It also confusing to the novice investor. Several different, good portfolio strategies are cited however. The problem is they are all included in the article as a kind of a mixed and matched way.
augmented reality profile picture
BM Cashflow Detective profile picture
The only thing that always works in the long term, taking into account all market cycles, is ...

Buy earnings and cash flows growth at less than it's worth.

Then market cycles will be much less something to fear and much more to profit from.

Investing is best when it is easiest. Then the bull market will continue in 2022 and well beyond.
The growth tech stock crashing hard except fang tesla . The value stock barely keep up with inflation. The fk fed create a dystopian investment world in cash you lose invest you lose even more.
kimboslice profile picture
I’m retirement age and 90% in stocks, without reservation.
In my case, dividends and interest are sufficient for me so I’m okay with the risk it may entail.
I’m able to remember the bad times from 1976-1983, what really worries me today is taxes rising.
I’m a proponent of mutual funds, mine are mostly at Vanguard; they have every variety of fund that I need.
I didn’t actually intend to be 90% in stocks, but if stocks rise 100% in a few years this can happen, and I’m okay with it 😉.
Re the near future: low interest rates favor stocks.
elliot_mllr profile picture
Enterprise Products Partners LP is not a CEF or in fact a fund at all. It is the largest MLP engaged in the midstream energy infrastructure business with about 75% of its revenues, EBITDA and gross operating margins based on natural gas and its derivatives including LNG, LPG, NGLs such as ethane , propane and butane which end up as feedstocks for industrial, chemical, medical and other products. EPD operates processing, fractionating, dehydrogenating, pipeline, storage and port loading and unloading facilities..
How and why it was listed as a closed end fund makes the article somewhat questionable.
Elliot Miller
@elliot_mllr "Note: All of the above funds are CEFs except EPD. EPD is an MLP (Master Limited Partnership)." Easy to miss a footnote.
JLassie profile picture

"Note: All of the above funds are CEFs except EPD. EPD is an MLP (Master Limited Partnership)."

This was listed just under table 2.
Financially Free Investor profile picture
@elliot_mllr - Thanks to @100centsofadollar for clarifying it (in the footnote). I guess I need to make it more clear and explicit in the future. Somehow, I like EPD more than any Energy MLP CEFs since most of these funds carry good MLPs as well as bad ones. Thanks.
Here is the breakup in one of portfolios that I manage right now - annual adjustment - once every October -

ITOT (50% -Total US stock market)
IXUS (10% - Overseas market)
AGG (20% - bond market composite)
LQD (5% - A-rated US corporate debt)
HYG (5% - US hi-yield)
SCHD (5% - Dividend aristocrats) MUB (5% - Munis)
@Sleeplss@FED , Seems like you are into something. Your 1yr average return is 18.6%, 3-yrs is 14.2% as per my calculation. It is a simple allocation and easy to maintain. How long have you doing it? Do you change this allocation on a yearly basis? How were prior year's performance? Are you member of any group in SA? Is there any way to follow you except turning on the follow under your name, which I did?
Interesting, well-presented, and logically sound…thank you.
Income4ever aka Cyclenut profile picture
Good commentary
If you are confident and hold high conviction investments no point worrying about what may or may not happen. Knowing that the market has consistency through history regardless of the changeling and changing market cycles risen to new highs after even the deepest corrections or bear territory....
You have 4 choices once the market cliff dives, hold, swap or sell... or if you have dry powder buy. SELLING IS NOT A GOOD CHOICE
@Income4ever aka Cyclenut
I sold my individual stocks on 28th Feb of 2020 and bought twice the number of the same shares on 30th of April…Periodic selling in anticipation of a downturn or selling when you reach your targeted rate of return (20% in a year), is good for portfolio health…
brasscop profile picture
@Sleepless@FED Good move! Next time post something a couple of days ahead of time; I could use the help.
We might as well be able to enjoy another super-bubblicious overvalued bull run like that in 1982-1987 = 5 years and 1994-2000 = 5-1/2 years of irrational exuberance.

- how to identify Irrational Exuberance: www.tradingview.com/...
- Nasdaq High-Tech Manias: s3.tradingview.com/...

- (incoming) BEV + AI Revolutions: www.tradingview.com/...
- (incoming) Biotech Revolution: www.tradingview.com/...

Those are my best bets for the 2020s.

BEV revolution is already a very high probability with advanced countries banning or drastically curtailing ICE manufacturing as early as the 2030 or 2035, and hundreds of $Billions of capital are already earmarked by global car manufacturers in the next 5 years as they fast-track R&Ds and for (huge) high-tech BEV Factories.

Fully Autonomous Vehicles not yet high probability at the moment but could become instant $Trillion(s) industry in the not so distant future if AI level-4+ software got fast-track approvals from governments for mass deployment as they already have been successfully tested for geo-fenced cities in China, Europe, and the USA for months/years. And if the DOJO AI being developed by Tesla suddenly became 'aware' per se, there is no stopping TSLA from becoming an instant multi-trillion company.

High-tech biotech probability of success is based mostly on Elliott Wave Analysis + an ardent hope governments would provide more incentives for cutting-edge technologies such as mRMA that proved excellent solution vs. Covid19, including perhaps Gene Therapy to solve many diseases suffered by mankind since time immemorial.

- SnP500 Yearly Performances: www.macrotrends.net/...

Since the 1980s and during secular bull runs, most common multi-year pattern of Two-Steps Forward and One-Step Back became an investors' mantra in recent years/decades, albeit not popular to the 'great unwashed' so to speak.

Two-steps-forward each step in double digit gains while one-step-back a flipped coin either small-gain or small-loss. But in 1995 to 1997, there was a three-steps forward that eventually resulted into 5-steps forward.

If this year proved another step-forward, that's a much better strategy to pursue by newbie DIY gaming investors. Otherwise veteran gaming investors, who have been LEFT Behind by the massive 27% bull run from Jan-Nov2021, should load up their portfolios at the end of this year or early next year for the expected usual two-steps-forward strategy, if their one-step back strategy for this year actually worked in the next few weeks before the year is over.

Win-Win Strategies.
Just be very careful with CEFs that use leverage. One of my CEFs in 2020 went from $9 to .80 cents. Not only do you lose capital but they also cut the dividend 90% so you get crushed both ways in a crashing stockmarket.
@anewrevolution How do you view CEF's that don't use leverage?
@anewrevolution What CEF of yours went from $9 to 80 cents? (I assume you meant 80 cents, not .80 cents).
@anewrevolution And individual stocks do not crash or cut dividends?
And debt on the balance sheet of individual companies is not a form of leverage?
Deebeeng profile picture
Put it all on $SHIB and enjoy the ride
Incomeiam profile picture
@Deebeeng , hey why not. Like playing the lottery.
@number 14 it is a very speculative crypto currency that I would stay far away from.
John R. Clark profile picture
Good morning and thanks to our host for presenting an urgent matter to discuss. For with each passing week we come 7 days nearer the next market correction, happen when it may and WILL.

In my view, a sound financial plan does not rely on foretelling the market, sidestepping every hazard or avoiding losses at all times. Our household's set of mutual funds are self- adjusting in pursuit of their fixed objectives. In this I am assured of three things: our holdings will lose value at times, they will seldom if ever perform optimally during situations as viewed in hindsight; and the duty to preserve and protect our wealth falls to me as house planner and manager.

The offense aspect of our plan as just mentioned is simple and ready- made. It's about the best that my wife and I can do, rather than stirring ourselves to get savvy at picking and trading. Our third- best choice has served us OK all along. For defense in a market crash we keep cash reserves to fill in rather than selling off distressed assets. We also keep a view to postpone certain pleasures and outlays as need ever be.

Some people, if they budget at all, spend as much as they are certain of earning from work and/or investments. Since an "unexpected" "emergency" ought not to happen and would be unjust if it did, they see no need to prepare for one. Here, the two of us long ago learned to THINK READY. Apart from our income base, we keep tranches of investments for future big outlays. To cover near- term urgencies such as (recently) physical therapy and a new bed, we hold reserves in the bank. If spending from this cash today means saving a little harder in months to come, then it means that.

So I see no point in fretting over the uncertainty of next coming year. The world has neared its end before. Forty-plus years ago I served on the front line of a widely feared Third World War. A friend of mine in those days went on to write a sci-fi thriller, "The War In 2020" with the United States an ally of the Soviet Union --- published half a year before that regime's collapse. (He never meant the novel as a prophecy, just a great read, which indeed it still is.)

Thank for reading, friends! Merry coming Christmas!
tridacna profile picture
@John R. Clark You, sir, are a very wise man.
@John R. Clark John, We’ll said.Over 90% of performance is dictated by the ratio of stock to bond in your portfolio, not hot stock picking. Your outline of reasonable steps before and during a market correction covered it all.
It’s hard to believe but there are surprisingly still some good deals in this market where most stock valuations are through the roof. These past couple of weeks I added MO, DOW, BMY, GILD, PSX, and VZ. You just have to look for the deals.
Deebeeng profile picture
@tone33139 market of stocks as they say
Financially Free Investor.
And how would a retiree in their 70s or 80s deal with a more severe crash of perhaps 70% even with the 4 bucket approach?
Without the 6 Trillion $ of stimulus 3/20 that would likely be the size of that drop from a much lower base.
Financially Free Investor profile picture
@du4sloop - Obviously, we do not wish for nor do we expect the market to fall 70%. But, here is how this 3-bucket portfolio will behave. In our estimate (no guarantee though), bucket 1 will fall 45%, bucket 2 will lose 75%, whereas bucket-3 will lose no more than 5% (in fact it may gain some). So, the average will be a loss of about 30%-32%. Sure, nothing to celebrate but still a whole lot better than 70%. Moreover, this portfolio will still be providing 5% income.
Also, if one has a 4th cash bucket, the loss could be even less. Thanks.
@Financially Free Investor
Don't you think a retired investor at a relatively advanced age might consider some significant exposure to some investment quality fixed income such as MGF MIN BKT? They could spend say around half of the average 7.5% yield and re invest the balance to offset any erosion of capital. They would trade interest rate risk for market risk but reinvesting some of that yield would also temper that effect somewhat. You would have very limited downside risk and it might be a far better alternative to an annuity for those wanting a safe flow of monthly income.
This is the best relatively simple plan I’ve seen over the past several months on maximizing potential income and returns with reasonable risk mitigation. Not sure I would follow it precisely but gives me a different perspective on my current allocations and I will likely do some “tweaking” to my own portfolio along these lines.
Financially Free Investor profile picture
@Twhamp1957 - Thanks. I am glad you like it. All the best.
greg24211 profile picture
Buy good value dividend growth stocks and blue chips, and own BRK to mitigate downside risk. That's what I'd do.
I'm curious how you are doing back testing with the Bull-N-Bear Rotation Model, as it purportedly changes every 30 days?
Always enjoy your Saturday posts.
If I had to divide my portfolio into three buckets, they are individual stocks, index funds, and bonds. Of course, there’s also cash, currently about 4 years’ worth. (The cash stash was much smaller before I retired.)

The stock bucket contains the usual DGI suspects, and some tech. The index fund bucket is mostly U.S. Total market, include international, small cap, and REITs. The bond bucket includes corporates, treasuries, and municipals (in the taxable portion.)

Over the last 2 years I’m up about 30%, seriously lagging a pure S&P500 portfolio. I’m also lagging the 3-bucket portfolio presented here, but with less risk IMHO. Plus, it's as close as I can get to a portfolio that manages itself.
Dividend Ambassador profile picture
I’d go 100% w Bucket 1 and forget the other buckets. It will be much simpler and I think, much safer. But, I think you left out: BMY, MO, UNM, MRK, CI, C, and GILD. Value blue chips outperform over the very long term and value is very much due to outperform again.
greg24211 profile picture
@killiondt As a young investor with a long term horizon I agree with you. Put it in good value blue chips. Not worried about the downside as much.

But for retirees and people closer to retirement, mitigating risk is extremely important.

I am long BMY, MO, and C from your list.
04 Dec. 2021
@killiondt I agree, 100% bucket 1 sounds good. Especially because bucket 1 is not completely resistant. In March 2020, I think WMT stayed flat but most other low beta consumer staples lost some value. I'm probably staying the obvious. When the market is down 5% and you are down 2.5% it is cold comfort.
(There is also EEMV, low volatility emerging markets)
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