Retail stocks & whether or not mid-caps will be best in 2022?

Hi Charles,

A timely question as we covered retail stocks on Friday, in essence, we think more money will be spent on ‘experiences’ rather than ‘things’ as the world exits (hopefully soon) the Covid cloud, however as you rightly point out, they have been weak pricing that view in. We’re neutral the sector at this stage, a bit 50/50 which we don’t like to be however that’s the case for now.

Small & midcaps are more speculative in nature as a generalisation and when things are good they outperform. In the past year the S&P 500 has rallied ~22% while the Russell 2000 is up by just 2%. That shows the narrow nature of last years moves and why a lot of active managers will have underperformed while the index huggers would have done well. Looking at the macro backdrop into this year, lower liquidity & tighter monetary policy should be a negative for smalls relative to big’s all else being equal however we think 2022 will be more of a stock pickers market verses the last so picking the right stocks, big or small will be the most important element.

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Nick Scali (NCK)

LAST UPDATED 15/01/2022 06:03

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Nick Scali (NCK)

LAST UPDATED 15/01/2022 06:03