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Bob Doll's 10 Predictions for 2022

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2022 will be a challenging year for both stock and bond investors, according to Bob Doll, chief investment officer at Crossmark Global Investments, a faith-based investment firm.

“While economic and earnings growth are likely to be good, a ‘too-high’ inflation backdrop and rising real interest rates suggest less favorable and more volatile conditions for investors than have prevailed since the pandemic lows,” writes Doll in his annual “10 Predictions” forecast.

He views the 2022 equity market as a “tug of war between a good earnings tailwind and a modest valuation headwind.” 

The S&P 500 posted double-digit returns in each of the previous three years, with gains in 2021 topping 27% but falling short of the 40%-plus growth in earnings.

“Despite a positive earnings picture the overall macro backdrop will become less favorable for the equity market in 2022,” writes Doll.

Less accommodative Fed policy and reduced fiscal stimulus combined with elevated market valuations, slower revenue and earnings growth and rising bond yields will lead to “more frequent pullbacks and higher volatility,” writes Doll. “Valuation will be of paramount importance in positioning equity portfolios.”

Bonds, writes Doll, will be under pressure from likely rising yields with government bonds suffering losses and underperforming corporate bonds that should be supported by “decent economic growth.”

Check out the slideshow above to view all of Doll’s 10 Predictions for 2022.