Anastasia Makarevich
As has become an almost annual tradition, many Seeking Alpha authors are presenting their 2023 stock lists faithfully.at the beginning of In 2022, we released a list of investments to avoid. HereThis article has been read very well, so I thought it would be interesting to see if my predictions were correct.
In this article, we will look at the results of these predictions. How many of the seven were right and how many were wrong? In a future article, we’ll follow up on this by predicting which stocks to avoid in 2023.
2022: Benchmark
To investigate how well (or how badly) our predictions were, we use the S&P 500 (SP500) as a benchmark to see if our predictions were right or wrong. But first, let’s recap what we did and didn’t know at the beginning of 2022. First, inflation was already rising, and energy and raw material costs were already rising. However, Russia had not yet invaded Ukraine and it seemed likely that covid would remain a global problem for the foreseeable future. The market was already showing some cracks, but little did we know that 2022 would be the start of a new bear market.
Chart 1: S&P 500 Price Trends in 2022 (Source: YCharts)
As you can see, the S&P 500 is down almost 20% in 2022. Of course, this could change in the final week, but we typically don’t see much extreme stock market action in the final week of the year. Now let him look at my predictions one by one and analyze if I was right or wrong.
#1: Meta Platform (META)
I thought Meta was both a risky investment and one that was likely to underperform the market in 2022 due to the large bets on the Metaverse and potentially stagnant additional earnings. .
Chart 2: Meta’s stock price performance in 2022 (Source: YCharts)
Meta is down about 65% this calendar year, well below the S&P 500. In hindsight, the drop in Meta’s stock price was likely caused in part by Apple’s (AAPL) privacy changes, which led to a decline in advertising revenue for Meta. The metaverse and the (lack of) investor confidence that this will soon lead to additional revenue may be another factor. Big risks remain, but with Meta already down significantly in his 2022 and current stock looking cheap, Meta is back on the investment list to avoid for 2023. I don’t think so.But in 2022, this phone will be completely correct.
#2: Meme Shares of AMC Entertainment Holdings, Inc. (AMC) and GameStop Corp. (GME)
People at home due to COVID-19, government cash handouts, success of broker Robinhood (HOOD), Reddit (REDDIT) swarms of investors are factors that will drive meme stocks to unprecedented levels in 2021 I predicted that 2022 would feature a return to normal for these stocks.
Graph 3: AMC and Gamestop stock prices in 2022 (Source: YCharts)
Both AMC and Gamestop have returned to more logical ratings levels during 2022, but looking at the graphs, this was not in a linear fashion to say the least. Ultimately, AMC had a staggering 84% drop this year, while Gamestop did better with a minus 45%. correct
#3: Tesla (TSLA) and Other EV Manufacturers
At the beginning of 2022, Tesla had a market capitalization of over $1 trillion and a price-to-sales ratio of over 25. This valuation was clearly unsustainable, especially by other automakers (compared to non-EV market caps). I also expect other EV makers to underperform, with my article specifically mentioning Rivian (RIVN), Lucid Motors (LCID), BYD (OTCPK:BYDDF), and NIO (NIO). So these are the stocks we are analyzing.
Chart 4: Tesla, Rivian, Lucid Motors, BYD and NIO stock price trends in 2022 (Source: YCharts)
As you can see, all of them have fallen more than the S&P 500, most of them down 60% or more, with BYD being the only exception. We can’t be sure that EV stock prices have stopped falling, so we’ll have to investigate whether to include Tesla or other EV makers on our list of investments to avoid in 2023. correct
#4: Office REITs
I believed that during the aftermath of Covid, employees would continue to work from home and office REITs would suffer as a result. I didn’t specifically mention the company name when I predicted office REITs would underperform the market, so it’s a little hard to tell if my call was right or wrong. Alexandria Real Estate (ARE), Boston Property Let’s take a look at three of the largest office REITs: Real Estate Investments (BXP) and Kilroy Realty (KRC).
Chart 5: 2022 Alexandria Real Estate, Boston Properties and Kilroy Realty Stock Performance (Source: YCharts)
As you can see, all three of these large office REITs performed worse than the S&P 500. In fact, most employees (myself included) started coming to the office regularly again in his 2022. So my reasoning was incorrect, but the results were still spot on. So while I’m counting this one, I wouldn’t recommend these as investments to avoid in 2023. correct
#5: Dogecoin (DOGE-USD) and Shiba Inu (SHIB-USD)
I argued that some cryptocurrencies were very popular in 2021 even though they were very popular and didn’t bring about technological improvements. Dogecoin and Shiba Inu trade like memecoins, and we expected their prices to fall below the market in 2022.
Chart 6: Dogecoin Price Trends in 2022 (Source: YCharts)
Dogecoin is down 55% in 2022. YCharts does not offer a chart for Shiba Inu, but year-to-date it performed even worse than Dogecoin at -75%. With Dogecoin’s market cap still over $10 billion and Shiba Inu over his $4 billion, we think these cryptocurrencies will continue to be key contenders on the investment list to avoid in 2023. correct
#6: Palantir Technologies (PLTR)
I mention Palantir because it was the well-discussed battlefield stock in Seeking Alpha. The stock had already fallen significantly before his 2022 start, but he still thought it was too expensive at a valuation of more than 23x sales.
Graph 7: Palantir Stock Price Trends in 2022 (Source: YCharts)
Honestly, I could have picked other growth stocks that are overvalued, and that’s still true, but at the beginning of 2021, the stock reached about $40 and was already starting to fall, so I’m not sure. We thought Palantir was a bolder option. After dropping more than 65% in 2022, he is now trading at just over $6. correct
#7: Cash
He argued that keeping a large portion of the portfolio in cash in 2022 was not a good idea because of inflation. So cash actually outperformed significantly. Of course, depending on the currency you choose, if you use USD or EUR cash was a strong investment he will beat the market in 2022.My predictions about cash are completely error.
Overview and Summary
| S&P 500 | -20% | standard |
| meta | -65% | correct |
| AMC and GameStop | -84% and -45% | correct |
| Tesla, Rivian, BYD, NIO, Lucid Motors | -28% to -82% | correct |
| Office REITs | -34% to -41% | correct |
| Palantir | -66% | correct |
| cash | 0% | error |
So for 2022, 6 of my 7 predictions that stocks and assets will underperform the market were correct.Only cash will outperform the market. I think this is partly a lucky shot. Had the stock market risen this year, the results might have been different. In particular, office REITs and stocks, which I mostly chose for their overvalues such as EV Producer and Palantir, could have worked better in this situation.
In the next article I will try to repeat this feat. The rules remain the same. We forecast seven investments that we believe are likely to underperform the market in 2023 and compare them to the performance of the S&P 500 in 2023. looking forward to!
In hindsight, these predictions seem like a no-brainer, but at the time, they weren’t. Of course, we all knew at the time that memetic stocks, Palantir, and EV producers were very expensive, but predicting when they would drop was no easy task. I think there are fewer obvious cases of overestimation now than there were a year ago. So the task of predicting next year’s losers is probably more difficult than last year.
Editor’s Note: This article describes one or more securities that are not traded on any major US exchange. Please be aware of the risks associated with these stocks.