Inflation will begin to settle down, but the dollar will weaken in 2022, according to Bob Doll, chief investment officer of Crossmark Global Investments, a values-based investment company based in Houston.
For these reasons and others, Crossmark favors a diversified portfolio across asset classes and geography, Doll said today during a press conference about his annual 10 predictions, which were released Tuesday.
In a nutshell, Doll said, Crossmark likes cyclical over defensive stocks, value over growth, small companies over large, and international over domestic.
“2021 was a banner year with the stock market up 28% and U.S. economy the strongest it has been since 1984,” Doll said. “This year, investors are going to have to hold two opposing thoughts in their minds at the same time. The year will be a tug of war between earnings tailwinds and valuation headwinds.”
Crossmark is looking favorably at financials and energy over communications services and utilities, the CIO said. And values-based investing, Crossmark’s specialty, will continue to grow, he said.
“We now have a lot of history that shows investors do not have to give up performance to invest in their values,” Doll said, and that includes actively investing in companies that do good for the world and the community, as opposed to just avoiding companies that are harmful.
Investment advisors and the press have a job to do in the coming years, Doll said. “The average investor has underperformed the market on most asset classes for the last 10 years. The only way to do that is to buy high and sell low," he said.
For this year, companies’ earnings will have tailwinds, in part, because consumer are going to be spending some of the cash they are sitting on, Doll said.
Some other rules are going to apply to 2022 as well, Doll noted. The U.S. deficit, having hit a 60-year-low, is going to go up for many years go come; investors should expect lower returns; and more attention will need to be paid to the headwinds confronting valuations, he said.