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KCI Research Positions For 2022: Look For The Capital Rotation To Continue



  • Both 2020 and 2021 saw a historic capital rotation hidden in plain sight. Investors should expect more of the same in 2022.
  • Faster-than-anticipated economic growth could spark a faster than anticipated normalization of monetary policy.
  • Part of this normalization of monetary policy could include higher long-term interest rates, which will spur an already ongoing historic capital rotation.
  • The difference this year, versus the past two years, is that valuation-insensitive passive investors are about to experience the stealth bear market that has been occurring under the surface.
  • Ironically, higher-than-anticipated global economic growth could be a catalyst for the next leg of the growth-to-value rotation.
  • This idea was discussed in more depth with members of my private investing community, The Contrarian. Learn More »

golden crystal ball in a hand, prediction for 2022, brights stars and sparks on abstract shiny background

winyuu/iStock via Getty Images


Seeking Alpha is running a series on 2022 market outlooks. Here is our take, question by question below.

What do you expect to be the key driver of stock market performance in 2022? What items will

The Contrarian

There is historic opportunity in the investment markets today.  I have spent thousands of hours analyzing the markets, looking for the best opportunities, looking to replicate what I have been able to accomplish in the past.  From my perspective, the opportunities in targeted out-of-favor equities today are every bit as big as the best opportunities in early 2016, and late 2008/early 2009.  For further perspective on these opportunities, consider a membership to The Contrarian, sign up here to join.

This article was written by

KCI Research Ltd. profile picture

KCI Research, aka Travis, has been a financial professional for over 20 years. Formerly a director of research at a mid-sized RIA, and one of four strategic investment decision makers at one of the largest RIA's in the United States, Travis founded his own boutique investment firm in February of 2009. He specializes in against grain investing backed by real-world wisdom and experience by targeting out-of-favor, contrarian investment opportunities.

Travis is the leader of the investment group The Contrarian where he shares premium research and uncovers investment gems hidden in plain sight. Travis shares an all weather portfolio for minimal volatility along with a concentrated best-ideas portfolio Learn More.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CVX, AND XOM, AND SHORT AAPL, ARKK, NVDA, QQQ, SPY, AND 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.

Every investor's situation is different. Positions can change at any time without warning. Please do your own due diligence and consult with your financial advisor, if you have one, before making any investment decisions. The author is not acting in an investment adviser capacity. The author's opinions expressed herein address only select aspects of potential investment in securities of the companies mentioned and cannot be a substitute for comprehensive investment analysis. The author recommends that potential and existing investors conduct thorough investment research of their own, including a detailed review of the companies' SEC filings. Any opinions or estimates constitute the author's best judgment as of the date of publication and are subject to change without notice.

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 (25)

thb007 profile picture
Besides TrueContrarian, KCI, I don't read any other noise and form a thesis from these....... Thank you,........ WTK.........
Yo, Ed profile picture
Hey KCI,
Enjoyed your article and benefited from it. Just wanted to reach back to you to see what your thoughts about where we are in this rotation. Oil and Gas are overcrowded now. Is the rotation petering out as price of oil comes down?
KCI Research Ltd. profile picture
@Yo, Ed

The conviction of the bulls is going to be challenged (see last week), and newer converts will get thrown off the bullish bandwagon, however, having said that, the structural bull market is just getting started, IMO.

Yo, Ed profile picture
It all makes sense, but there is still a lot of cash sloshing around in the market looking for a home. I thought I had nailed it last February with this strategy when the 10 Yr rose to 1.72 - only to watch yields drop back under 1.2 and a rotation back to growth. We will see if it sticks this time.
Thank you Travis AR, CLF and X are holding my portfolio of growth stocks up!!
This time the comments are so few...you know what I mean.
@KCI Research Ltd. Do you have a perspective on entire commodity driven countries like Brazil, whose valuations have been driven down to ridiculously low PEs (think EWZ or ILF)?
Great article. I have made money following every single one of your trade ideas. I made money on my shorts of ARKW TOST and WCLD. My best are my long positions (thank you for AR), which are DVN, MRO, AR, APA and SD. I am also long METC, X and CLF. I have also made money recently on WFC. Keep up the good work. And thanks for the articles.
@simonthecat - Consider moving your METC money in to AMR. AMR is at least 2x better than METC or Warrior Met Coal. DYODD.
@Invest_2020 I will look into it... thanks for the advice.
@simonthecat Agreed. I thank my lucky stars that SA’s algorithms put me on to Travis and KCI. I still remember reading the “AR is a generational buy” article. Just wish I had bought more…
miriam ledwith profile picture
I think that every portfolio needs some MSFT or AAPL in it. They may become the granny stocks like SBUX did after its huge run up decades ago. But I've been in XOM now for 24 months, buying more on the April 2020 drop, and it's fun to watch it move higher.
2022 will be 2015, there will be no escape!
Djreef1966 profile picture
Natural rotation out of high risk tech into interest/dividend bearing vehicles as rates rise. I’m thinking the same is happening for clepto currencies. Folks are looking for stability and deep value at this point. Names like T, RIO, and BABA plus REITS and MLPs fit this narrative.
@Djreef1966 Ha!, clepto currencies....love it.
secorewb profile picture
Good info and love the format of your article. Thank you.
Willow Street Investments profile picture
What does the author think of this?

KCI Research Ltd. profile picture
@Willow Street Investments

If you look at 2000 as an analog, this tells me we are still early in the decline. When capitulation happens, nobody wants to buy these names.

For an example of capitulation, look at Antero Resources in the spring of 2020.


Look at the discussion section. Usually, a washout requires buy the dip buyers to walk away. Time will tell if that is what is occurring in this decline that has seen the average Nasdaq Composite stock decline more than 40% from its highs.

PT Larry profile picture
Right on and thanks for the article.
KCI Research Ltd. profile picture
This was submitted for publication late Monday night, January 3rd, and obviously, the capital rotation to open 2022, the next leg higher in the capital rotation, which encompassed 2020 and 2021 too, has progressed further.

Here are some selected YTD returns through the first three calendar days of 2022.

Peabody Energy (BTU) - Higher by 13.2%

Occidental Petroleum (OXY) - Higher by 9.7%
Cleveland-Cliffs (CLF) - Higher by 9.3%
Exxon Mobil (XOM) - Higher by 9.1%
Nucor (NUE) - Higher by 7.5%
Energy Select Sector SPDR Fund (XLE) - Higher by 6.7%
U.S. Steel (X) - Higher by 6.1%
SPDR S&P Oil & Gas Exploration & Production ETF (XOP) - Higher by 5.9%
Cenovus Energy (CVE) - Higher by 5.7%
$WTIC Crude Oil - Higher by 3.5%
Tesla (TSLA) - Higher by 3.0%
iShares Russell 2000 Value ETF (IWN) - Lower by 0.3%
SPDR S&P 500 ETF (SPY) - Lower by 1.4%
Apple (AAPL) - Lower by 1.5%
iShares Russell 2000 ETF (IWM) - Lower by 2.3%
Invesco QQQ Trust (QQQ) - Lower by 3.4%
iShares 20+Year Treasury ETF (TLT) - Lower by 3.6%
Alphabet (GOOGL) - Lower by 4.9%
Microsoft (MSFT) - Lower by 5.9%
NVIDIA (NVDA) - Lower by 6.1%
ARK Innovation ETF (ARKK) - Lower by 9.0%
Salesforce.com (CRM) - Lower by 10.4%
Snowflake (SNOW) - Lower by 12.4%

Recognizing this historic capital rotation has been a key to our group thriving, and members tell the story best.


Best of luck to all in 2022,

thb007 profile picture
Less money in people's pockets, Fake government jobs stats, yet, people continue to believe. Hasn't CNN or ABC taught anyone it's all BS. If people have spent their Stimmies, then savings, now paying a percentage on CC debt for the holidays,.... 2+2= debt,.... Housing crisis #2, no downpayments, again......
Ashdove profile picture
Don't forget 2 other important materials resurging recently: coal and fertilizers.
KCI Research Ltd. profile picture

Agreed. Peabody (BTU) one of our top picks for 2021, that delivered a 317.8% return in 2021, is higher by 13.2% already in 2022 through the first three trading days of the year.

nuppal profile picture
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