Start 2022 on the right foot
With the major market indices ending 2021 near record highs,
analysts who have been cheerleading the meteoric rise appear to have
justification for their bold claims. Having been burnt before by the 2008
financial meltdown, the natural reaction is skepticism. Yet ardent bulls claim
that the best is yet to come for stocks to buy in 2022. Certainly, the
immediate evidence points in that direction.
Still, I can’t help but think rampant speculation has never
ended well throughout history. In a few articles for InvestorPlace, I’ve
mentioned Yale economics professor Robert Shiller article on the New York Times
about the public sentiment during the Roaring Twenties. If you approach the
evidence that Shiller provides with intellectual honesty, you can’t help but
feel the fervor aligns with what we’re seeing today for high-risk, high-reward
stocks to buy.
One contributing factor that led to the great crash of 1929
was stock trading on margin. Retail investors who lacked the sophistication of
their professional peers essentially borrowed money from brokers to buy popular
securities. Things started to unravel when borrowers could no longer keep their
account in the black, so to speak. While the situation hasn’t gotten that bad
yet, the current speculation on risky stocks to buy harkens back to a dangerous
time.
At the same time, I’m not crazy enough to bet against the
market (at least not at the moment). I can’t help but remember the old adage:
the market can stay irrational far longer than you can stay solvent. Still,
it’s not wise to ignore some of the worrying signs. For instance, if popular
stocks to buy in 2021 are still amazing, the executives of those issuing
companies have a strange way of showing it.
Sure, the insider selling may be for perfectly legitimate
reasons, such as tax considerations and portfolio rebalancing to account for
inflation. But I think it’s also fair to ask, what do they know that we don’t?
In that spirit of skepticism, here are possibly safer and
more reliable ideas for stocks to buy in 2022:
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