Outlook for Equities

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Equities’ high growth potential makes them an important tool to achieve your financial goals. If you’re looking for a financial planning service in Palm Beach, it’s worth discussing whether equities are right for you.

Let’s cover what you should keep in mind as we enter 2022: how equities performed last year, why three of the biggest wealth management companies feel bullish about them, and what you can do to add them to your portfolio.

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How Did Equities Perform in 2021?

While the year came with many challenges, the stock market performed reasonably well. Looking at some of the market’s biggest indexes is illuminating:

  • The S&P was up 26.9%.
  • The Dow Jones Industrial Average was up 18.7%.
  • The Nasdaq composite was up 21.4%.[1]

The coronavirus, labor shortages, supply chain issues, and rising prices each presented their own challenges for the economy, but low interest rates and positive corporate earnings meant that equities were in good shape throughout the year.[2]

Qualities to Look for in an Investment Opportunity

Merrill Lynch, Goldman Sachs, and Morgan Stanley all see good economic indicators for the first two quarters of 2022. They arrive at roughly the same conclusions, but it’s still interesting to see what factors they credit with this positive outlook.

While the pandemic has posed challenges to the economy, it’s also presented many new opportunities. The insight that these wealth management companies provide can help you understand where some of the best opportunities are as we look toward 2022.

Merrill Lynch

Merrill Lynch believes job growth will continue and that the United States will move toward full employment. Adding more people to the workforce will ease labor and supply shortages, which will have a positive impact on the economy.

Their analysts also look toward China’s recovery as a catalyst to spur overall economic growth. They believe that investors should be looking specifically at long-term investment themes related to innovation. While investment diversity is important, these are some of the sectors that they expect to thrive:

  • Energy
  • Financials
  • Industrials
  • Materials
  • Large-Cap Technology[3]

It’s always important to do research when investing, but in China, it’s especially important to keep in mind the way that the government can impact investment. In 2021, China’s crackdown impacted many tech companies, including Tencent, Meituan, and Didi.

Generally speaking, the government seems more likely to crack down on companies in the video game and cryptocurrency spaces, while endeavoring to keep innovation and investment strong in strategically important areas, like semiconductor manufacturing.[4]

Goldman Sachs

In the first half of 2022, Goldman Sachs sees several trends that should spur economic growth:

  • Increased Inventories – We’re beginning to see the effects of companies trying to stabilize their supply chains, which means the concerns over limited inventories should decrease.
  • Health Care Innovations – The health care industry continues to develop new tools, both to combat this pandemic and a variety of other conditions.
  • Boosted Consumer Spending – Lockdown and inventory troubles have both left consumers with the desire to spend money. This time should give them the capacity to buy what they want.

By the middle of 2022, though, they believe there may be a slowdown in developing markets’ growth rates. They also believe the Fed may increase interest rates, though they do not expect this to happen until July 2022.[5]

Morgan Stanley

Analysts at Morgan Stanley believe that the positive trends the American economy showed in 2021 will continue into 2022. Specifically, the US’s response to COVID, as well as the new infrastructure bill, put it in a good position for the first half of the year.

The Fed’s actions are similarly encouraging. They’re beginning to taper bond purchases, and by the summer of 2022 they show no plans to ease monetary policy and further. This shows confidence in the economy.

These rosy signs should give investors the confidence to buy riskier assets. They’ll also put upward pressure on real estate purchases.[6]

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How a Financial Planner Can Help

Financial planners have the experience and expertise necessary to understand the strategies best suited to fulfilling your investment goals. Whether you’ve recently suffered losses, or you’re looking to take advantage of gains, they can help rebalance your portfolio.

They can also vet investment opportunities. Depending on the situation, this can be an involved process that considers people involved with the investment and how much growth potential it represents.

They’re also invaluable to help you understand the shifting sands of the markets. While many planners emphasize long-term investment over short-term trades, their jobs also leave them well-equipped to understand trends that could leave laymen confused.

The importance of this can’t be overstated, especially when considering the volatilities the markets have shown amid the pandemic. There are many potential investment opportunities; you want to find the ones that make the best use of your money.


Many investors are concerned about inflation. Luckily, this economic force is likely to have less of an impact on stocks than on other areas of the economy. During inflationary periods, equities typically perform well compared to other investment vehicles.

In particular, energy stocks tend to be positively correlated with high inflation. Consumer discretionary and financials, on the other hand, are usually negatively correlated with rising prices.[7]

Working with a financial planner can help you better understand the equities that have the best chance of shielding you from inflationary pressures. In many cases, they can even help you find the picks that will take advantage of inflationary trends.

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Looking for a Financial Planning Service in Palm Beach?

You’ve come to the right place! Legacy Financial Partners has helped many clients look over their portfolio and financial situation to determine where exactly their money should go. Our goal is always to find the right matches between investors and investment opportunities.

Have any questions about what we can do for you? Looking to speak with a financial planner to help ensure your fiscal future? Please don’t hesitate to reach out to us today via the information on our contact page. We love helping people get a deeper understanding of the financial possibilities available to them.


Content prepared by Kara Stefan Communications.

1 Anna-Louise Jackson, John Schmidt. Forbes. Jan 3, 2022. “2021 Stock Market Year In Review.” https://www.forbes.com/advisor/investing/stock-market-year-in-review-2021/  Accessed Jan. 28, 2021.

2 Paulina Likos. U.S. News & World Report. Oct. 29, 2021. “Stock Market Outlook for Q4 2021.” https://money.usnews.com/investing/stock-market-news/articles/stock-market-outlook-for-q4-2021. Accessed Nov. 15, 2021.

3 Bank of America, Merrill. November 2021. “Here Comes The Pivot.” https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/Viewpoint_November_2021_Merrill.pdf. Accessed Nov. 15, 2021.

4 Brian Liu, Raquel Leslie. Lawfare. Jan. 7, 2022. “China’s Tech Crackdown: A Year-in-Review” https://www.lawfareblog.com/chinas-tech-crackdown-year-review Accessed Jan. 28, 2021.

5 Goldman Sachs. Nov. 8, 2021. “GS Macro Outlook 2022: The Long Road to Higher Rates.” https://www.goldmansachs.com/insights/pages/gs-research/gs-macro-outlook-2022/gs-macro-outlook-2022-the-long-road-to-higher-rates.pdf. Accessed Nov. 15, 2021.

6 Matt Hornbach. Morgan Stanley. Nov. 11, 2021. “What the Fed wants, the Fed gets.” https://www.morganstanley.com/ideas/thoughts-on-the-market-rates. Accessed Nov. 15, 2021.

7 Jurrien Timmer. Fidelity. Nov. 3, 2021. “Top sectors amid inflation.” https://www.fidelity.com/insights/markets-economy/inflation-sector-returns. Accessed Nov. 15, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

12/21 – 1933415C

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