Markets

Here's Why We Like the Market Set-Up Heading Into 2022

Scott Mlyn | CNBC

(This article was sent first to members of the CNBC Investing Club with Jim Cramer. To get the real-time updates in your inbox, subscribe here.)

You can "blame" easy money for the strong run in stocks this year.  You can talk about stocks being the "only game in town." You can figure out that companies are stronger than ever because business is just so darned strong and the Fed is keeping rates low.

Me? I think that these "excuses" for a strong market led so many people astray that they serve as reminders that "good is good," not bad as so many of the so-called sages that we have to listen to all day would tell you.

We live in a Cinderella world where so many people expect midnight to change everything from hopeful to disastrous. The litany of what was supposed to blow up in our faces made owning stocks seem like a mugs game, when it turned out that shorting was the mugs game — the intellectual equivalent of who can best map out a flat world.

Will 2022 be any different? The Fed won't be as easy. The bankers and SPAC kings will keep pumping out junk pricing it low to entice, but the enticement is the real bear trap of this market. Most of the companies that have gone public are conceptual, when I have said perhaps too many times that 2022 will be the year of the tangible, practical and profitable.

There will be an occasional, shockingly good offering — like Endeavor Group Holdings (full disclosure, my agent) or Dutch Bros. Coffee — but most of the offerings were simply using the stock market as a branding opportunity that many fell for. These are companies that were counting for an opportunity to sell you something that makes them money, not you. They aren't called out more because so many people think it isn't their job to do so.

Why do I call them out? Because I don't play for dinner.

Why I like the market's set-up for 2022

I like the set-up for 2022 because so many don't. I like it because the opportunities to buy winners and surf the broader ETFs are too great, and because so many companies will prove to have stocks that are too low, especially the banks, retailers and oil companies. I like it because I believe the omicron Covid-19 variant blows through the nation quickly with few deaths and more people joining the workforce. I also think that companies that took advantage of high prices to expand did so at once, which will cause prices to crash in so many industries that we will wonder how tight the Fed really needs to be.

How about tech? Well, there's not so much here because of the garbage the Street sold us.  Beware of anything that sells at a "times sales" valuation — except for Snowflake, which has a brilliant model with a great CEO, Frank Slootman.

And once again, we will hear about how overvalued FAANG and friends are, with judgments offered by those who don't know what these companies do.

Could it all come crashing down? I hope it does, so we can buy stocks even cheaper than they are.

We will have to sell some stocks to bring in some bullpen names. We will have to soldier through PayPal (PYPL) and Wynn Resorts (WYNN) — I think they are dead money. The travails of lost opportunities for Boeing (BA) in pretty much every business line — all self-inflicted by the way — better work out soon. The chance for Omicron to blow through will also make Disney (DIS) a decent risk.

Remember, I mention the bad ones because the good ones take care of themselves.

If you asked me what the most exciting thing for 2022 will be, it's simple: the chance to teach thousands how to manage their own portfolios. We will be so inventive about it next year that I think you will wonder how you couldn't be a member because you will miss too much.  I am at the teaching age. I don't want your money or your commissions, I am not taking my cut.

I just want us all to be better at analysis, at thought and at discipline; to be more rigorous than we are. Why not make that the aspiration?

With that, have a Happy New Year, and I will see you in 2022.

The CNBC Investing Club is now the official home to my Charitable Trust. It's the place where you can see every move we make for the portfolio and get my market insight before anyone else. The Charitable Trust and my writings are no longer affiliated with Action Alerts Plus in any way.

 As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. See here for the investing disclaimer.

 (Jim Cramer's Charitable Trust is long BA, PYPL, WYNN, DIS.)

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