It always seems darkest before the dawn. But as day follows night, I feel that the market’s darkest days are behind us, and we will begin to see the breaking of a new dawn. In my 36 years of managing money, I have never been as excited about the prospects for a year as I am now for 2022. I do not believe the sky is falling; I believe the sky is the limit. I believe we have been in a secular bull market since the market bottom in 2009, and that bull market will continue for some years to come.

This not the Great Recession. GDP is increasing, not decreasing. Unemployment is at 3.8%, not the 10% of the Great Recession. Housing is expanding not because of the NINJA loans (No Income No Job No Assets borrowing) of the Great Recession, but because buyers have cash and/or credit. Banks have passed the stress test and have cash to loan.

Business, if not booming, is opening and growing. The global supply chain is mending, and those delayed products are finally making landfall in the United States. Companies have cash and can borrow at low interest rates. They are building new plants for chips, food and beverage products, electric vehicles, and solar and nuclear electrical production – to name a few. Restaurants are opening; cruise ships are sailing; planes are flying. The mask mandates are ending and there is so much pent-up demand for entertainment – I am particularly excited for the baseball season, which is set to open in mid-April.

Everywhere you look there are “help wanted” signs. I overhead a conversation where a business owner related that a friend who owned a restaurant that he was going to have to pay $25 per hour for a dish washer employee. The number of people quitting their job to take better, higher paying jobs is at a record. That increases income, income increases buying, and buying increases demand. Companies can expand to fulfill the increased demand.

This is not the Great Recession, in which people worried that they were going to lose their job and their house.

We are going through a significant change in technology, demographics, and lifestyles. Many employees are not returning to the office or will come in only a few days a week. Productivity is increasing with this new hybrid type work schedule. It will reduce the office requirements, decrease overhead costs, and increase profits. That works for shareholders.

Company revenues and earnings for this year and 2023 are forecast to be above average. In spite of supply-push inflation and the war in the Ukraine, businesses are increasing their sales and seeing more drop to the bottom line. As location, location, and location are to real estate, earnings, earnings, and earnings are the driving force for stocks.

The Fed is facing the issue of reducing their balance sheet. That action is deflationary. (See my last newsletter for more details.)

Yes, I understand there is a war going on in Ukraine. There are going to be disruptions and those are going to affect some companies more than others. But war in itself will bring together most of the world and is going to accelerate some industry changes. It seems evident that a significant push to shift to alternative energy and away from fossil fuels is almost inevitable. As a part of that process, the conversion to and demand for electric vehicles will increase as well.

Companies and banks are either flush with cash or have the capacity to borrow at rates that are favorable. Funding does not seem to be an issue for most companies.

Yes, we are seeing a market driven by fear. But for me that is the opportunity. I believe in being invested in those companies with positive potential as we emerge from this market downturn. It is always darkest just before dawn.

There are so many positive factors set up for 2022 and 2023 that I am very excited for the rest of this year.