Will there be a bull market for stocks and shares in 2022?

Here’s why we could return to normal times in the stock market during 2022 and why that could be great for stock pickers.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A bull outlined against a field

Image source: Getty Images.

Several stock market commentators have been publishing views on their outlooks for 2022. And my overall impression is that most believe the raging bull market we’ve seen since the bottom of the Covid-crash in 2020 will likely lose steam.

There could be normal times ahead

I haven’t seen anyone predicting a crash. Although Chris Harvey of Wells Fargo Securities reckons the US market could become even more over-valued as 2021 runs to a close. To me, that suggests the possibility of what traders might describe as a blow-off top.

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And the clear implication is that US stocks could be in for a bit of a corrective lurch downwards in 2022.

But one theme that often pops up is many think stocks and shares are undervalued in the eurozone (including the UK). But I’d be a little careful with assumptions like that.

Much of such commentary originates in America. But the US market has been fizzing and popping with stratospheric valuations for a long time. So European markets will look cheap by comparison. But they might not be. Valuations could just be ‘normal’.

And ‘normal’ is my expectation for the performance of the UK market in 2022. My guess is that instead of a broad bull market lifting most shares, we’ll see a more subdued performance from the overall market. And there’ll be lots of negative news and things to worry about, as there always is.

But I’m not being gloomy about stocks. I reckon businesses and their shares offer some of the greatest opportunities available to build and accumulate wealth. And stocks that progress will likely be driven by the underlying operational advances of each individual business.

A stock-picker’s market

So some shares will likely go up, some down, and some sideways. And it’s up to me and other investors to analyse each opportunity with the aim of identifying the potential winners. In other words, I reckon 2022 will be a stock-picker’s market. And that would be a return to normal times without the skewing influence of a hopefully once-in-a-lifetime event such as the pandemic.

I think 2022 will be a great time to get stuck into investing in shares. So I’m working hard on my watchlist of stocks I’d one day like to own. And if there is a general market correction in 2022 — perhaps because of wobbles in the US market — I could find the list delivering some attractive entry points during the year.

Right now, I’m watching several stocks. For example, distribution and services company Bunzl. And Next, the clothing, footwear, accessories, beauty and home products retailer. I’m also watching IT infrastructure services company Computacenter. And smoking products maker Imperial Brands, along with several other stocks.

There’s no certainty these stocks will go on to perform well for me, even though I like them and plan to buy at opportune moments. However, I’m planning to invest in stocks and shares during 2022, whatever moves the overall market makes.

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Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Bunzl and Imperial Brands. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

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