Year-End Review (2021) and Year-Ahead Outlook (2022) on Equities & Real Estate (2022.01.02.)
The liquidity-driven stock market rally following the pandemic was destined to culminate by mid-2021 or, at the latest, the first quarter of 2022.
While the indices have recently dropped by several hundred points from their peaks where exorbitant P/E ratios were commonplace, this short-term correction does not signal the end of the broader downturn. Rather, it marks a structural inflection point where the overarching upward trend has fractured.
The break noted earlier has now materialized. What still looked like a correction at the time now appears to have been the opening phase of a broader downside move.
The move below 2,700 confirms that the post-pandemic liquidity rally had already fractured. The significance lies less in the round number itself than in what it validates: this is no longer a temporary pullback within a liquidity regime, but the beginning of a broader repricing phase.