"You probably don't want to be looking in the spaces that had a great year in 2021 because they probably won't in 2022," says Pie Funds chief executive Mike Taylor of the outlook for sharemarkets.
But making specific predictions was foolhardy and, more than ever, looking ahead was about assessing the big trends.
"There's just too many balls up in the air at the moment," Taylor said.
"It's just impossible to predict. We might get through Omicron absolutely fine and another variant might come out in March or April. So we can only deal with the fact we've got in front of us."
But however the pandemic recovery pans out from here there are some big forces at play we need to be aware of, he said.
Rising interest rates look set to be the key theme around the world.
The process has already begun in New Zealand but the US Federal Reserve has sped up its tapering plans and started talking about hikes in 2022.
The need to get that timing right heightens the chance of a "central bank misstep", Taylor said.
Market Watch - January from Pie Funds on Vimeo.
"Do they hike rates too fast? Maybe inflation starts to come down by the end of next year but by that stage they may have already put too much pressure on the market.
"We know from previous cycles that markets can usually cope with rising rates, especially at the start.
"The first year of a tightening cycle is normally still quite positive for equity markets, so unless the Fed gets really aggressive I'd say there is still a positive undertone."
Other pandemic-related economic trends were still causing headwinds, including supply chain and shipping delays which look to be with us for at least the first half of 2022.
There had also been a serious crunch on the supply and cost of labour which could prove more difficult to resolve, he said.
Most Western countries still had borders largely closed from an immigration point of view.
"Not only that but we've also seen the [labour] participation rate fall," he said.
"A lot of baby boomers, as a result of Covid, have decided to take early retirement."
That had seen the participation rate drop by 1 to 2 per cent in a market where unemployment was already very low.
Beyond that these was always a risk of market falls simply because valuations remained so high, Taylor said.
"So it's not unusual for markets to take a bit of breather. We always try and find a reason for it but sometimes there doesn't need to be a reason."
In terms of where to invest in 2022, looking at regions and sectors that had not done well in 2021 was probably a good rule of thumb, Taylor said.
"One of the regions that has been most challenged this year from a market perspective has been Asia."
Chinese tech stocks had struggled all year, he said.
The difference between US and Chinese equities was about 40 per cent - with the US up 20 per cent and China down 20 per cent.
That meant Asian markets now looked significantly cheaper than the US.
"So from an investment perspective, if you want to find value, you should be looking at Asia not the US," Taylor said.
"Even though there has been a correction I think there is still some vulnerability for US tech stocks."
- The Market Watch video series is produced in association with Pie Funds. View the original article here.
Information is current as at 10 January 2021. Pie Funds Management Limited is the manager of the funds in the Pie Funds Management Scheme. Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account?for personal circumstances or financial goals. Please see a financial adviser for tailored advice.?You may have to pay product or other fees, like brokerage, if you act on any advice.?As manager of the Pie Funds Management Scheme investment funds, we receive fees determined by your balance and we benefit financially if you invest in our products.?We manage this conflict of interest via an internal?compliance framework designed?to help us meet our duties to you.?For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our product disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information.