Today is the last day of trading in 2021, and it’s turning out to be a quiet one for the stock market. U.S. stocks were slightly down today, with the S&P 500 declining 0.12% at midday, while the Nasdaq Composite was off 0.26%, and the Nasdaq 100 was down 0.35%. The Dow Jones Industrial Average had lost about 70 points at midday.
Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More
Here are some clues about what investors should do as they prepare for 2022.
Last Day Of Trading In 2021 Is Quiet But Unlike The Rest Of The Year
Despite the quiet stock market action on the last day of trading in 2021, there's no denying that the year has been a profitable one for most stock investors. This year marks the third consecutive year of gains for the Dow, the Nasdaq Composite, and the S&P.
All three indices are close to all-time highs, and according to CNN, the S&P has closed at a record high 70 times in 2021. Stocks contained to rally despite the fear mongering among mainstream news outlets about the steady uptick in the more contagious but apparently less deadly omicron variant of COVID-19.
Among the big stock winners this year are Home Depot Inc (NYSE:HD) and Microsoft Corporation (NASDAQ:MSFT), which led the Dow Jones higher this year, rising by over 50% each. Oil was the big winner in the S&P 500, which was led by Devon Energy Corp (NYSE:DVN) and Marathon Oil Corporation (NYSE:MRO) thanks to soaring crude oil prices. Both stocks rose more than 100%. Big Tech continued to win on Wall Street as names like Apple, Alphabet and NVIDIA rose significantly in 2021.
On the other hand, leisure stocks were the primary losers this year led by Walt Disney Co (NYSE:DIS), which led the sector's plunge in the Dow with an almost 15% decline due to increased competition from Netflix Inc (NASDAQ:NFLX) and other streaming media companies. Casino operators Penn National Gaming, Inc (NASDAQ:PENN) and Las Vegas Sands Corp. (NYSE:LVS) were the big losers of the S&P 500 among leisure companies, tumbling by about 40% this year.
History Says It Isn't Time To Sell
As investors weigh the year's stock market action on the last day of trading in 2021, they look forward into 2022 to decide what to do with their portfolios in the coming year. Keith Lerner of Truist told CNBC earlier this month that history suggests this isn't the time to sell despite the volatility triggered by omicron.
He said patient investors will likely be ahead a year from now. CNBC pointed out that the 54% spike in the VIX volatility index on Black Friday was one of the five largest single-day moves for the index in the past 30 years.
However, Lerner pointed to the long-term trend in the VIX, which shows no instance among the 19 largest VIX spikes over the last 30 years after which stocks didn't gain the majority of the time one month, three months, six months and one year earlier.
There was only one instance of the 19 in which stocks were in the red a year later, and that was when the global financial crisis began.