Wall Street’s 2022 Outlook – New Challenges And Opportunities

Wall Street’s 2022 Outlook – New Challenges And Opportunities

Sunrise over Lower Manhattan. Wall Street chugged through 2021 on an easy money, novice investor track. However, looking back, the track is littered with baggage - inferior IPOs (Bloomberg: "Record-Setting Year for IPOs Fails to Deliver Historic Returns") and fizzled fads (Forbes: "2022 Stock Market Outlook: 2021 Fads And Fashions Are Forgotten"). Growth through easy money and deficit spending is being replaced by realistic expectations, planning and actions. Add in the Federal Reserve move to market-determined interest rates, and the 2022 outlook necessarily includes shifts in the financial markets. Among the shifts will be serious valuation adjustments of all assets, not just bonds. Leaving are the Fed's historically extreme policies: negative real interest rates and huge bond warehousing. Also exiting is the byproduct of carrying out these actions for a dozen years - the Fed-caused alteration of the financial industry's accepted beliefs. Therefore, in a return to "normal" financial market operations, not only will rates and valuations shift, but so, too, will participant beliefs. And that brings us to Wall Street. Wall Street operates on brain power and wisdom. A primary focus is on anticipating what lies ahead. If that is done well, all the rest (money management, financial advisory,