Call it the year of the waffle.
No, the Trader column never recommended buying Dine Brands Global (ticker: DIN), owner of International House of Pancakes, but we sure had a tough time deciding on a point of view.
Looking back on 2021, there was only one right answer for anyone playing the stock market: Buy and hang on. Every dip turned out to be short-lived and small enough to be ignored. There were no bear markets, no corrections, and even 5% declines were few and far between—there was just one. The S&P 500 index will finish the year up around 27%, and near its all-time high.
You wouldn’t have known that from reading this column, however. We were all over the map. We started the year by pleading for a correction that never came, and while we were spot on about tech’s early weakness, by the end of 2021, the Nasdaq Composite, up 22%, had done just fine. We were right, however, when we warned in a January 2021 column that small-cap growth stocks would have a tough time—they rose just 3.8% on the year.
We reacted too early to the Federal Reserve’s hawkish shift, which didn’t seem to matter much anyway. Who knew that the nation’s central bank would so masterfully avoid a taper tantrum this time around?
Our stock and sector calls were hit or miss and ultimately did no better than the overall stock market. Our biggest miss came during the early months of the year, when meme stocks were all the rage. In a Feb. 5 column comparing the Reddit traders to the chat rooms of the late 1990s, we offered up AES (AES), a highflying utility from the dot-com era, as a stock that looked ready to break out after 20-some years of rangebound trading. Our timing was terrible. Since that call, shares of AES have dropped 12% and underperformed the S&P 500 by 35 percentage points, through Tuesday.
A week later, we recommended Alaska Air Group (ALK) as a way to play the airlines. The initial call was good; the stock rallied 28% from Feb. 12 through April 6. That was around the time that the reopening trade started to run out of steam, and we never wrote a follow-up column telling readers to take profits. Instead, the stock finished down 7.9% from the time of our call and underperformed the S&P 500 by 29 percentage points. For a column dubbed the Trader, that’s a bigger sin than simply being wrong.
One of our favorite trades is buying stocks that get punished severely after an earnings report, particularly one that doesn’t seem too bad. That was the case with Kohl’s (KSS), which we recommended on May 21, after it had dropped 10% following a nice beat-and-raise. There was no bounceback for the retailer, which continued to trade erratically, but decidedly lower, over the rest of the year. It’s down 8.8% since we made our pick, underperforming the S&P 500 by 24 percentage points.
Sometimes, our strategy worked. We recommended beauty and fragrance company Coty (COTY) on Feb. 13, after it had fallen 15%, after a slight revenue miss. The turnaround story that was unfolding under new CEO Sue Nabi, who had taken over in 2020, was too strong to ignore. The stock has gained 46% since our pick, outperforming the S&P 500 by 24 percentage points. It’s one to keep an eye on in 2022.
Mall owner Simon Property Group (SPG), also turned out much better than Kohl’s. The stock, which we recommended on April 23, had been consolidating, but was also starting to receive some analyst love and a couple of upgrades. It also looked relatively cheap and offered a 4.5% dividend. It’s gained 40% since then and beaten the S&P 500 by 20 percentage points.
And if the return of inflation was the big story of 2021, then our inflation pick, Sherwin-Williams (SHW), did what it needed to do. Chosen in an April 30 column for its ability to raise prices as input costs rose, the paint purveyor gained 27% and outpaced the S&P 500 by 13 percentage points.
As 2021 comes to an end, our picks did no better than the S&P 500, as our big winners and losers ultimately canceled each other out. We’ll try to do better in 2022.
Write to Ben Levisohn at Ben.Levisohn@barrons.com