According to one analyst, stocks could face a “slow, laborious” decline in 2022 due to the Federal Reserve raising interest rates four times.
Dennis Gartman, the University of Akron Endowment Chairman, told Bloomberg Radio Monday that stocks could trade 10 per cent to 15 per cent lower this year. Gartman attributes the bear market to central bank raising interest rates amid a continued rise in inflation.
“The advent of a bear market will come when the Fed begins to tighten monetary policy, and that will be later this year. No question,” said Gartman, who formerly published the influential “The Gartman Letter."
The S&P 500 gained 27 per cent in 2021 and surpassed nearly all of even the most bullish analyst estimates. Gartman admitted he’s been wrong for the past six months to call for a bear market. As the chairman of the University of Akron endowment, he reduced equity exposure by 10 per cent to assure the foundation has ample spending money, but he said the risk in this strategy is that they miss out on further gains.
“I think it’ll be a slow, laborious decline in prices, not a crash of any sort of any substance,” said Gartman. “So it’s a matter of being less involved in the market. Going to the sidelines in a quiet and reasonable manner I think is the proper way to trade for the next year or two.”