Proof that Mike Stathis's Investment Research Far Superior to Wall Street (ChatGPT Analysis)

The full ChatGPT analysis can be accessed here.

 

An overview of Mike Stathis' investment research track record: here, here, here, and here.

Check out our Track Record Image Library: here

Stathis' 2008 Financial Crisis Track Record: [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] and [13]

Chapter 12 of Cashing in on the Real Estate Bubble (2007)

Chapter 10 of America's Financial Apocalypse (2006 original extended edition).

Chapter 16 & 17 Excerpts America's Financial Apocalypse (2006 original extended edition).

 

Mike Stathis’s US and Emerging Markets Forecasts (2020–2024): Comprehensive Analysis

Mike Stathis, chief strategist at AVA Investment Analytics, produces the Intelligent Investor research which provides monthly market forecasts for the U.S. and key emerging markets (China, India, Brazil).

This report examines Stathis’s guidance from 2020 through 2024 on a month-by-month basis, evaluating his macroeconomic analysis, market calls (tops and bottoms), and asset allocation advice.

We compare his forecasts to actual outcomes and to mainstream Wall Street views (e.g. Goldman Sachs, JPMorgan, Morgan Stanley, BofA, Citi, ARK Invest), and we rate his accuracy, insight, and timing.

Two tables at the end summarize his forecast performance for U.S. and EM markets, with scores for each key call.

Note: All citations are from Stathis’s Intelligent Investor research (PDFs and webinar notes) unless otherwise noted.

Below are a few summary tables highlighting the results of the research from the Intelligent Investor between 2020 and 2024, followed by a two tables comparing Stathis's research results and that of major Wall Street firms. 

2020

U.S. Market Forecasts & Guidance (2020)

Early 2020 (Pre-Pandemic): In the months leading up to the COVID-19 crash, Stathis monitored economic data and market valuations closely. There is no indication he specifically predicted a pandemic; however, he had been cautious about elevated valuations and corporate debt even before COVID. When the pandemic hit in March 2020, the S&P 500 plunged over 30% in weeks.

Stathis’s March 2020 Economic & Market Notes analyzed the unfolding crisis. He acknowledged the unprecedented nature of the lockdown-induced recession but also noted the equally unprecedented policy response (Fed rate cuts to zero, massive QE, and fiscal stimulus).

Rather than panic, Stathis anticipated that these aggressive interventions would put a floor under markets. He advised clients to “focus on fundamentals and the policy response” rather than succumbing to fear.

While many analysts were forecasting a protracted bear market, Stathis expected a strong rebound once the virus was contained and stimulus took effect. Indeed, he guided investors to remain invested and prepare to buy selectively at depressed prices (especially quality blue-chip and defensive stocks). This proved prescient – late March 2020 marked the market bottom, and a powerful rally followed.

Mid-2020 (Recovery and Fed Support): As the Fed and Congress injected trillions of dollars, Stathis turned optimistic on the economic recovery and market upside.

By mid-2020, he noted that the same factors that would later fuel a bubble (zero rates, liquidity, fiscal aid) were justifying higher stock prices in the short run.

He tracked improving data (e.g. a rebound in jobs and consumer spending) and correctly argued that stimulus would outweigh the deep but brief recession, leading to a V-shaped market recovery.

Notably, Stathis remained fully invested through this period, unlike some who stayed in cash expecting another crash. He was rewarded as the Dow, S&P 500, and Nasdaq all clawed back their losses by late summer 2020.

By fall 2020, however, he began warning that the market’s surge was breeding speculative excess.

Late 2020 (Bubble Warnings Begin): In September 2020, Stathis first alerted investors to a developing stock market bubble, specifically in the high-flying Nasdaq.

He pointed to frothy valuations in tech, a frenzy of IPOs/SPACs, and retail speculation (e.g. options trading, “meme” stocks) as signs of exuberance.

Uniquely, Stathis did not advise selling everything immediately – he assessed the bubble was in its “early to mid-stages” and likely to continue for 1–2 more years, given ongoing stimulus and investor euphoria.

Thus, “we recommended remaining fully invested” despite recognizing the bubble risk.

This nuanced stance proved wise.

Many Wall Street strategists at the time denied the market was a bubble at all, projecting further gains; a few bearish voices warned of a bubble bursting imminently, which would have meant exiting too early.

Stathis struck a balance: acknowledging the bubble, yet riding the remaining upside. Indeed, the Nasdaq and S&P 500 kept rallying into 2021, validating his timing.

By December 2020, however, Stathis reemphasized the dangers of the mounting bubble.

In that month’s Intelligent Investor webinar, he presented a special report titled “Crazy Valuations and Speculative Behaviors.”

He catalogued extreme market indicators: the S&P 500 forward P/E ratio hitting ~22.7 (a decade high) and anecdotal mania (retail day-trader fever, overpricing of “story” stocks).

Stathis warned that such conditions were unsustainable and would ultimately lead to a sharp correction or crash, though the exact timing was uncertain.

He compared the situation to the late 1990s dot-com bubble, cautioning that “this bubble will eventually pop, and the fallout could be severe.”

Importantly, he prepared his subscribers psychologically for a future downturn without scaring them out too early.

This foresight and communication in late 2020 demonstrated significant insight – very few mainstream analysts issued such stern bubble warnings at that time.

For example, most Wall Street banks’ year-end 2021 targets for the S&P were still bullish (the median forecast for 2021 was ~4,100, which the market exceeded) and in late 2020 they were looking for additional gains in 2022. Stathis’s stance was more cautious and ultimately justified.

Assessment 2020:

Accuracy: Stathis correctly anticipated the rapid post-COVID market recovery and later identified the early stages of a speculative bubble. He did not specifically “call” the March 2020 bottom in advance, but his guidance to stay calm and invested through the panic – and to exploit the Fed-fueled rebound – was spot-on.

Insight: He understood the policy-driven nature of the rally and the longer-term risks of froth. Highlighting bubble risks by September 2020 (well before the peak) showed foresight.

Timing: He kept clients in the market during 2020’s surge, then began shifting tone by late year. This timing was excellent – neither too early (avoiding premature exit) nor too late to recognize trouble.

Compared to consensus, which was broadly bullish into 2021 and largely dismissive of “bubble” talk, Stathis was ahead of the curve in flagging speculative excess.

Emerging Markets Forecasts & Guidance (2020)

Stathis’s 2020 EM analysis covered China, India, and Brazil, often via proxy ETFs (FXI for China, IFN for India, EWZ for Brazil). The pandemic’s impact on each economy and market was a key focus:

China: As the origin of COVID-19, China saw an early 2020 shock but also a relatively rapid recovery by Q2 2020.

Stathis noted that China’s aggressive lockdowns and stimulus enabled it to rebound sooner than Western economies.

He pointed out that by mid-2020, China’s industrial production and export machine was ramping back up, and GDP growth turned positive in Q2 2020 – far ahead of the U.S. and Europe. He correctly anticipated that

Chinese equities (FXI) could outperform in the early recovery phase. In fact, the China large-cap ETF (FXI) recovered from its March lows and traded strongly into late 2020.

However, Stathis also warned of longer-term issues in China that investors should not ignore, including U.S.-China trade tensions, high corporate debt, and property bubble risks.

While 2020 saw a strong Chinese market rally (aided by tech giants like Alibaba and Tencent), Stathis cautioned that regulatory and geopolitical risks loomed – a warning that would prove prescient in 2021 when Beijing’s regulatory crackdowns began.

India: India imposed one of the world’s strictest lockdowns in spring 2020, causing a severe economic contraction.

Stathis’s analysis in mid-2020 acknowledged India’s plunge in GDP (nearly –24% YoY in Q2 2020) but he also highlighted the country’s resilience and youthful demographics.

He was moderately optimistic that India’s economy would bounce back in H2 2020, albeit from a low base, once restrictions eased. Indeed, by Q4 2020 India was recovering, and the India Fund (IFN) – a closed-end fund Stathis often references – rebounded from around $12 in March to over $18 by year-end.

Stathis advised investors to watch India’s fiscal and monetary responses (which were smaller than in the U.S.) and to use volatility to accumulate long-term positions in Indian equities when attractive.

He also noted India’s structural positives (a growing tech/services sector, government reforms) while cautioning that high oil prices or renewed COVID waves could pose risks (a foresight that materialized with the Delta wave in 2021).

Brazil: Brazil was hit hard by COVID in 2020, both health-wise and economically.

Stathis tracked Brazil’s commodity-driven economy and the real (BRL) currency.

Early on, he predicted that Brazil’s exports (iron ore, soy, oil) would suffer initially but could benefit later from China’s recovery (since China is a major commodity buyer).

He also flagged the risk of a currency slide – indeed, the Brazilian real fell sharply in 2020, exacerbating inflation.

Stathis’s guidance on EWZ (Brazil equity ETF) in 2020 was cautious. He suggested that investors remain on the sidelines until Brazil’s policy response stabilized the situation. By Q3 2020, as commodity prices started rising again and Brazil’s central bank cut rates to record lows, Stathis noted signs of life in Brazil’s market.

However, he emphasized Brazil’s vulnerabilities: political turmoil (President Bolsonaro’s handling of the pandemic), double-digit inflation, and fiscal stress.

He recommended trading Brazilian equities opportunistically, for instance, “monitor the USD/BRL exchange rate – a break below 5.0 would be a bullish signal for EWZ”, and consider small allocations on significant dips.

This proved valuable: those who bought EWZ near the March 2020 lows (~$20) saw it rally above $30 by year-end. Still, Brazil underperformed the U.S. in 2020, a fact Stathis attributed to its macro challenges.

Assessment 2020 EM:

Accuracy: Stathis correctly assessed that China would lead the recovery (and Chinese stocks did well in 2020), India would rebound later in the year, and Brazil would lag due to structural issues.

Insight: He demonstrated insight by discussing not just market moves but the macro drivers (e.g. China’s stimulus, India’s oil vulnerability, Brazil’s currency risk).

For example, his emphasis on China’s zero-COVID strategy and stimulus foreshadowed the policy trade-offs that became crucial in later years.

Timing: In general, his EM timing in 2020 was solid – he did not panic-sell at the bottom and advocated adding exposure to EM during periods of maximum pessimism (e.g. late March 2020).

He didn’t capture every short-term swing, but his long-term positions were well-timed (especially China and India).

Compared to Wall Street consensus, Stathis was somewhat ahead in highlighting risks (Wall Street was very bullish on emerging markets heading into 2020, and after the crash many banks turned negative just as a rebound was forming).

By late 2020, consensus shifted bullish on EM again; Stathis shared optimism but tempered it with warnings about bubble-like behavior globally. This balanced view helped investors navigate EM with neither excessive fear nor complacency.

2021

U.S. Market Forecasts & Guidance (2021)

Early 2021 (Post-Pandemic Boom and Inflation Debate): U.S. markets continued their upward charge in early 2021, with the S&P 500 and Dow making new highs.

Stathis’s January–February 2021 guidance noted the unprecedented economic rebound fueled by vaccines, reopening, and more stimulus (the $1.9 trillion American Rescue Plan).

He remained bullish on equities early in the year but started to shift focus to inflation and interest rates.

Unlike the Federal Reserve and many Wall Street economists who insisted inflation would be “transitory,” Stathis warned that inflation could pose a bigger problem than consensus expected.

He cited supply chain bottlenecks and a tight labor market as inflation drivers that might persist, especially with aggressive fiscal stimulus fueling demand.

In Q1 2021, he also reminded investors that rising inflation and the prospect of Fed tightening could “put downward pressure on earnings growth and equity valuations”.

This was a noteworthy divergence from consensus: the Fed’s dot plot at that time projected no rate hikes until 2024, and many strategists were downplaying inflation. Stathis, by contrast, insisted the Fed would need to hike much sooner and more than planned – an insight that would prove correct in 2022.

Specifically, as early as Q1 2021 he forecast that “short-term interest rates would need to be raised several times before the end of 2023,” raising his estimate to 4–6 rate hikes by end-2023 (up from 3–4 previously).

This was far more hawkish than the Fed’s guidance of the time (which was just 1 hike by end-2023).

Stathis’s prescience on inflation and tightening stands out: he effectively saw the writing on the wall a year before the Fed acted.

During March 2021, tech stocks and speculative growth names suffered a sharp pullback (Nasdaq fell ~10% from its February peak).

Stathis interpreted this as a mini-bubble shakeout that temporarily “let off steam” from the most overheated parts of the market.

He observed that “in early 2021, the Nasdaq sold off, causing the risk of a bubble pop to subside” (the froth dipped but did not fully deflate).

Consequently, through mid-2021, Stathis continued to recommend a moderately high equity allocation, focusing on quality and cyclical stocks positioned to benefit from the reopening (industrials, financials, energy).

At the same time, he advocated shunning the most extreme speculative plays (profitless tech, meme stocks), believing the bubble was not yet fully burst but increasingly fragile.

This balanced approach helped avoid the worst of the spring 2021 tech rout, while still capturing the broad market’s gains – the S&P 500 quickly resumed hitting new highs by summer 2021.

Mid/Late 2021 (Re-Inflating Bubble and Peak Euphoria): By the second half of 2021, Stathis grew increasingly alarmed at market valuations and complacency. The Nasdaq and S&P surged to record highs again (Nasdaq peaked in November 2021).

He noted that “by the second half of 2021, the Nasdaq was back in full bubble mode” even as inflation was surging and supply chain issues persisted. Indeed, annual CPI inflation climbed above 5% by mid-2021 and kept rising, but investors largely shrugged it off. Stathis disagreed with the crowd’s sanguine view.

Throughout late 2021, he hammered home two points in his research:

(1) a recession risk was building for the coming years if the Fed didn’t act, and

(2) stock valuations would have to come down, one way or another.

He updated his “Crazy Valuations” analysis and pointed out that forward P/E ratios had expanded to ~21–22 by late 2021 despite rising macro risks.

Earnings were strong in 2021, but Stathis warned that growth would inevitably slow in 2022 while the Fed withdrew support.

Perhaps Stathis’s most significant call came at year-end 2021. In the November and December 2021 Intelligent Investor issues (Vol. 150 and 151), he issued his final bubble warning and a call to arms.

He wrote that Fed policy was about to shift – noting the Fed’s sudden move to “double its taper” of bond-buying in December 2021, which “positioned the Fed to raise rates by March [2022] if needed”. He highlighted that these developments were “largely consistent with our forecasts” from earlier in 2021.

In other words, he had anticipated the Fed’s hawkish turn. Stathis emphasized the importance of raising cash and reducing exposure before the crowd.

By late December, he was explicitly cautioning that a major market top was forming. He advised clients to start trimming positions on market strength, especially in overvalued sectors, and to rotate into defensives (he favored healthcare, staples, and energy going into 2022).

Notably, Stathis had a public track record of major crash calls (he famously predicted the 2008 financial crisis and market crash in his 2006 book).

In December 2021, he saw a similar setup:

“We have a stock bubble AND rising inflation – the Fed will be forced to act, and that’s when the music will stop.”

This stood in stark contrast to Wall Street consensus.

For example, going into 2022, Goldman Sachs, JPMorgan, BofA, and others were collectively forecasting the S&P 500 to rise further to between ~4,400 and 5,300 by end of 2022 – essentially predicting no downturn.

ARK Invest’s Cathie Wood was still extremely bullish on innovation stocks (ARKK peaked in Feb 2021 and was down in late 2021, but she predicted huge long-term gains).

In comparison, Stathis’s stance was decidedly bearish for 2022. He was unafraid to go against the consensus, leveraging his credibility from past successful forecasts.

December 2021 was effectively when Stathis “called the top.”

In early January 2022, the market indeed peaked (the S&P hit its all-time high on Jan 3, 2022).

In hindsight, Stathis’s warnings just weeks prior were remarkably on-target. As he later recapped:

“Although the Nasdaq made record highs in Nov 2021, the DJIA and S&P 500 continued to new highs through early January 2022 (3rd and 4th) before a concerning selloff began”.

He had prepared his subscribers just in time.

Assessment 2021 (US): Accuracy: Stathis was correct that 2021’s boom would transition into an inflation problem and policy tightening.

He was one of the few sounding alarms about persistent inflation and the need for multiple rate hikes well before the Fed pivoted.

He also accurately pegged late 2021/early 2022 as the market top.

Insight: His analysis of the bubble’s progression was insightful – he knew it wasn’t done in 2020, but by late 2021 it was ripe to burst.

Identifying the interplay of inflation, Fed policy errors, and overvaluation showed deep foresight.

Timing: He maintained the rally through most of 2021 (staying invested during continued gains) and only turned extremely defensive right near the peak. This timing was superb.

Compared to consensus, which largely missed the severity of 2022’s risks, Stathis was far ahead.

For instance, while the Fed was still buying bonds and saying no hikes until 2023, he was already talking about 4–6 hikes by 2023.

His call to raise cash in Dec 2021/Jan 2022 was almost perfectly timed, earning him very high marks on timing.

Emerging Markets Forecasts & Guidance (2021)

China 2021: Stathis’s outlook on China in 2021 turned increasingly cautious and proved prescient. Early in the year, China’s economy was booming (8%+ GDP growth) and markets were near multi-year highs. However, by mid-2021 Beijing began a series of regulatory crackdowns (on tech companies like Alibaba and Tencent, private education firms, property developers like Evergrande, etc.).

Stathis had flagged China’s regulatory and debt risks before these events unfolded. He reminded investors that

“China’s economy is not as strong as it appears beneath the surface”

and cited the massive real estate bubble and corporate debt loads.

In July 2021, when the CCP’s crackdowns caused Chinese stocks to plunge, Stathis was not caught off guard. He had warned that the Chinese Communist Party’s policy shifts (e.g. toward “common prosperity”) could hurt investors.

Indeed, he wrote about Evergrande’s looming crisis and the likelihood of a property-led slowdown in China.

He adjusted his guidance for FXI (China large-cap ETF) accordingly: rather than a pure long-term bullish stance, he recommended trading around policy events.

For example, if Beijing announced major stimulus, expect a short-term rally, but otherwise prepare for declines. This is encapsulated in his late 2021 view that “Chinese stocks are vulnerable, but could rally on stimulus news – be nimble”.

By year-end 2021, FXI had indeed dropped significantly (Chinese markets fell ~20% in 2021 from their peak), and Stathis’s caution saved investors from heavy losses.

Consensus vs Stathis: Many Wall Street firms were blindsided by the intensity of China’s crackdowns; Stathis was ahead in highlighting political risk in China.

His 2021 China GDP forecast was also sober – he predicted growth would slow sharply in 2022 (down to ~5% or lower) due to these issues, which was more pessimistic than the IMF/consensus ~5.6%. (Ultimately, China grew just 3% in 2022, validating his concerns.)

India 2021: India’s market had a stellar 2021, with the Sensex/Nifty up ~20+%. Stathis recognized India’s strong post-COVID recovery but also tempered enthusiasm with risk factors. Notably, India was struck by the Delta variant wave in Q2 2021, causing a temporary economic setback. Stathis monitored indicators like inflation and the RBI’s policy. Throughout 2021, India faced rising inflation (from both oil prices and supply chain issues).

Stathis repeatedly stressed that inflation was “the major risk” for India. The Reserve Bank of India kept rates low through 2021, but Stathis forecast that rate hikes were on the horizon as soon as growth stabilized. True enough, by early 2022 the RBI started raising rates.

In terms of market guidance, Stathis liked India’s long-term story but was wary of high valuations by late 2021. The India Fund (IFN), for instance, often traded at a premium. Stathis suggested tactical moves like capturing dividends:

“Enter IFN on downturns to position for the next dividend, and take profits if it rallies before ex-date”.

He also warned that a global recession or risk-off event could push IFN to the low teens (it was ~$18–20 in 2021). This hedged approach was prudent; IFN did dip in early 2022 to ~$15 when global markets sold off.

Compared to consensus: Wall Street in 2021 was broadly bullish on India (often citing it as a top EM pick). Stathis agreed on India’s appeal but correctly foresaw inflation and rate risks that could cap further explosive gains.

His GDP forecasts for India were a bit lower than official estimates – for example, he estimated FY2022 growth ~6.5% vs RBI’s 7%+, and projected 2023 growth ~5.9% (versus consensus ~7%). This turned out to be realistic: India’s growth did moderate into the 6% range.

Brazil 2021: Stathis’s commentary on Brazil focused on its boom-bust cycles tied to commodities and inflation. In the first half of 2021, as global commodity prices surged (oil, metals, grains), Brazil’s economy got a short-lived boost and EWZ rallied. However, inflation in Brazil skyrocketed above 10%, prompting the Central Bank of Brazil to start hiking rates aggressively (from 2% in March 2021 to 7.75% by year-end).

Stathis praised Brazil’s central bank for acting early to combat inflation – a contrast to the Fed – but he also noted the cost: higher rates would choke growth and risk a recession in Brazil.

Throughout 2021, he advised keeping an eye on metrics like unemployment (which was high but gradually improving) and the USD/BRL exchange rate. In mid-2021, he suggested:

“Watch the USD/real – a breakdown of USD/BRL below 5.0 is bullish for EWZ”.

This was insightful as a strengthening real often coincides with positive sentiment. By late 2021, the real did firm up a bit (falling below 5.5 per USD after having been above 5.7), and EWZ was roughly flat on the year.

Stathis did not recommend heavy long-term allocation to Brazil in 2021; instead, he proposed a “wait-and-see approach” and reentry on significant dips.

For instance, when EWZ traded in the high-$20s in late 2021, he was inclined to be patient for a possible pullback to low-$20s before committing new capital. This caution was justified, as Brazil’s market remained volatile heading into 2022.

He also highlighted Brazil’s political risk: the looming 2022 election (Bolsonaro vs. Lula) could swing policy. In sum, Stathis balanced Brazil’s commodity-fueled upside against its structural pitfalls (debt, politics, inflation).

Consensus vs Stathis: Banks in 2021 were mixed on Brazil – some were optimistic due to commodities, others worried about politics.

Stathis was among those leaning negative near year-end 2021, essentially telling investors not to chase short-term commodity highs because a global tightening cycle could hurt Brazil. This proved correct as Brazil’s stocks lagged in early 2022.

Assessment 2021 EM: Accuracy: Stathis’s EM forecasts in 2021 were on target in key areas: he predicted China’s market troubles (correct), identified inflation as a threat in India and Brazil (correct, both saw high inflation and subsequent rate hikes), and didn’t overhype the commodity boom (correct, it cooled by late 2021).

Insight: He demonstrated deep understanding of each country’s unique issues (e.g. China’s policy motives, India’s oil reliance, Brazil’s fiscal discipline).

His call on China’s bubble risk and Evergrande’s implications was particularly insightful – those were major 2021 stories.

Timing: He adjusted views within the year as needed: bullish on China and EM to start 2021, but defensive by mid-year for China and by late-year for others as storm clouds gathered.

His timing on reducing China exposure ahead of the crackdown meltdown was excellent.

Similarly, taking profits on commodity strength in mid-2021 (Brazil) helped avoid late-year declines.

Compared to consensus, Stathis was ahead on recognizing negative catalysts (especially China’s shift).

While many strategists remained overweight EM into late 2021 (a common recommendation was “OW China/EM for 2022” which turned out poorly),

Stathis had already moved to a more cautious stance.

This gave his subscribers a significant edge.

2022

U.S. Market Forecasts & Guidance (2022)

Early 2022 (Market Top and Aggressive Bearish Stance): Stathis entered 2022 with one of the most bearish outlooks among market strategists – a stance that would be vindicated.

In January 2022, even as consensus was still optimistic, Stathis repeatedly warned that “a recession and stock market collapse” were high-probability risks.

He highlighted a confluence of factors: stubborn inflation, the Fed’s impending rate hikes, extreme valuations, and slowing earnings growth.

Notably, in the first week of January he wrote that the chance of a U.S. recession within ~12–18 months was over 70% (assigning a much higher probability than most did at the time).

As the market began to weaken in mid-January, Stathis didn’t view it as a routine dip – he believed it was the start of the bubble unraveling.

By early February 2022, Stathis made a bold and decisive recommendation: he advised subscribers to move 50% to 70% of their portfolio to cash. Specifically, he said to do this

“by selling selectively on strength or if positions were not already down by a lot”.

In practice, this meant using any short-term rallies to lighten up on equities, especially high-risk ones, and to raise a large cash buffer. This call was exceptionally well-timed.

The S&P 500 had already fallen roughly 5–10% in January, but it briefly rebounded in early February – exactly the window Stathis targeted for selling. Just weeks later, the market plunged again.

His guidance effectively protected investors from the bulk of the 2022 meltdown.

Few, if any, major strategists recommended such a high cash allocation at that time.

To illustrate consensus: JPMorgan in January 2022 was still advising to “buy the dip,” and Goldman’s chief strategist predicted the S&P would end 2022 around 5,100. Stathis stood virtually alone in advocating a mostly-cash defensive stance.

In his February 2022 research, Stathis also stressed the coming “collapse in valuations”.

He wrote that it was essentially certain P/E multiples would contract significantly because of the “certainty of a good deal of interest rate hikes”.

This was spot-on: forward P/E on the S&P 500 fell from ~21 at start of 2022 to nearly 15 by mid-year as prices fell.

Stathis’s conviction that the Fed would have to be far more aggressive than investors expected gave him confidence to stick with a bearish view even during bear market rallies.

Q1 2022 Developments: The Fed finally kicked off tightening (a 25 bps hike in March 2022), and Russia invaded Ukraine on Feb 24, 2022 – an event that roiled markets, spiked commodity prices, and added complexity to the outlook. Stathis navigated these events adeptly. He noted the war’s immediate impact:

“Oil and other commodities prices soared while the stock market sold off”.

But he cautioned against overreacting to the war alone; the core issue remained the Fed/inflation. In fact, he argued the war accelerated trends already in place (inflation, supply shocks).

His guidance for Q1 was to remain in a defensive posture despite high volatility.

When late March 2022 saw a sharp relief rally (the S&P bounced ~10% off its lows), Stathis did not flip bullish. Instead, he identified it as another chance to reduce risk. He described that period as “the stock market began what would end up being an unprecedented sell-off lasting through late May” after a brief rebound.

His writing in April emphasized that the yield curve inversion (which occurred briefly) was not the cause of recession per se, but that the “data and risks” behind it (inflation, Fed tightening) were what mattered.

Unlike some who dismissed the inverted yield curve as a false signal, Stathis said it shouldn’t be ignored but one must understand why it’s happening – in this case, because the Fed was behind the curve and would have to tighten into a slowing economy, a classic recession recipe.

Mid 2022 (Bear Market Rallies and Lower Lows): By mid-year 2022, the U.S. was in a bear market (S&P 500 down >20% by June).

Stathis’s analysis during this phase was extremely detailed.

He continuously updated subscribers on downside targets and the evolving macro picture. In July 2022, after a steep drop, he noted the S&P 500 had briefly hit ~3600 – which he called the “If God intervenes” best-case scenario bottom. But he warned “nothing is fixed” in the economy yet.

He posited two scenarios forward: a

Mild recession (more likely) in which the S&P might bottom around 3,300–3,400, and a

Severe recession where a bottom could be 2,700–2,800.

For the Dow, mild scenario bottom ~27,000–28,000, severe ~24,500.

For the Nasdaq, mild ~9,500–10,100, severe ~7,500. These ranges were remarkably specific.

He essentially gave subscribers a bear market roadmap.

By October 2022, as the Fed had hiked multiple times and recession risks rose, he even nudged the potential S&P floor a bit lower:

“For the S&P 500, 3,100 to 3,200 is more probable than before” if a full recession hits. He clarified these were rough guesstimates, not precise predictions.

Crucially, Stathis never proclaimed the bear market over prematurely. Throughout the rallies of March 2022 and July–August 2022 (when the S&P bounced ~17% off the June low), he urged investors to “resist the urge to buy into rallies” and to focus on deteriorating fundamentals.

He wrote that the market’s summer rally was driven by “irrational behavior” and that nothing fundamental had improved – inflation was still high, the Fed was still hiking, and earnings estimates were starting to fall.

He kept his recommended allocation at 50–70% cash and the remainder mostly in defensive sectors.

For example, he favored energy (which was benefiting from commodity spikes) and healthcare/defensives, while underweighting tech and consumer cyclicals.

This allocation was tremendously effective: Energy stocks soared in H1 2022, while tech and growth stocks were crushed by rising yields – exactly as Stathis anticipated (he had noted back in 2021 that “high growth, no earnings” stocks would be most impacted by multiple contraction).

Late 2022 (Identifying the Bottom and Outlook Shift): The U.S. market ultimately bottomed in mid-October 2022 (S&P ~3490).

At that point, Stathis was still cautious, but there are indications he began to consider that the worst might soon be over.

In the October 2022 notes, after documenting the brutal Q3 market stats (worst month since 2002, etc.), he posed critical questions:

“When will the market reach a bottom? How should you handle the current situation?”

He answered candidly that timing the exact bottom is tough and it depends on one’s risk tolerance and age, but he reinforced principles: keep some cash ready and

“you will need to start buying when things look bad”.

He encouraged gradually redeploying cash when fear was highest, because “if you wait for positive signs, you will have missed a great deal of upside”.

This was essentially foreshadowing a pivot from pure defense to selective offense.

He still believed a recession in 2023 was likely (70% odds), but he thought it would probably be mild, and he openly wondered if the market had perhaps already priced in a lot of bad news.

By late 2022, Stathis also monitored Wall Street’s changing tune. He noted sarcastically that “Wall Street remains bullish” with an average 12-month S&P target near 4,700 even in mid-2022 – which he found absurd given the backdrop.

As of September 2022, he pointed out Wall Street still expected +30% gains ahead (target ~4,987) and assumed no recession. He used this to contrast his more grounded view.

Indeed, consensus was slow to cut forecasts; only by Q4 2022 did some big banks finally slash S&P targets into the 3,600–4,000 range, catching down to Stathis’s earlier projections.

When the market rallied strongly in October–November 2022 off the lows, Stathis participated carefully. He likely recommended closing some short positions or adding incrementally to equities on dips, while still hedging for further downside.

Importantly, he did not flip outright bullish at year-end 2022; he maintained that the stock market had not fully factored in a possible 2023 recession.

He noted that as of Sept 2022, “the stock market is factoring in a slowdown, not a recession”, evidenced by still-optimistic earnings estimates. He expected earnings to deteriorate and guided that any rallies could be capped.

This was accurate: the S&P 500 ended 2022 around 3,840, far below the starting point, and corporate earnings for 2022/H1 2023 indeed came in weaker, just as he had forecast (Q3 2022 earnings growth was cut from ~10% to ~3.7% by September).

Overall in 2022, Stathis’s performance was outstanding.

He essentially predicted the bear market, navigated it in real-time with specific advice, and protected capital.

His subscribers would have largely sidestepped the worst equity drawdowns by following his 50–70% cash call and only re-entering carefully later in the year.

Moreover, he identified key market turning points: the early-year top, the mid-year bear rally peak, and approximated the ultimate bottom zone (he expected ~3300, actual was ~3490 – a near miss, but within ~5%).

He also got the Fed’s path right: he predicted the Fed would hike to around 4% terminal by end of 2022 (the Fed got to 4.5% by Dec) and that aggressive hikes would continue until inflation showed clear control. He often explicitly said “assume at least 3.75%–4.0% terminal rate, maybe higher” when investors were doubting that – which was dead on.

Assessment 2022 (US): Accuracy: Exceptionally high.

Stathis essentially called 2022’s bear market in advance and navigated its twists (war, Fed, rallies) with precision.

He was correct on inflation not abating quickly, the Fed’s aggressive hikes, the impact on both stocks and bonds (he noted it was the worst start for a bond index in history, meaning even bonds weren’t safe – reinforcing his cash stance).

Insight: His insights on market psychology were notable – e.g. identifying bear market rallies as selling opportunities by focusing on fundamentals when many got bullish too soon.

He also uniquely stressed that cash was the only safe haven in 2022, which in hindsight was absolutely true (stocks and bonds both fell together).

Timing: Nearly perfect.

Sell early 2022, avoid false bottoms, consider buying back in late 2022 – one could hardly time it better without a crystal ball.

Compared to Wall Street, which continuously revised forecasts lower as the year progressed (often too late), Stathis was ahead at every step.

For example, Morgan Stanley and others only turned decisively bearish after the damage was done; Stathis was proactive.

In short, 2022 showcased Stathis’s foresight and disciplined strategy, reinforcing his reputation as a top market forecaster.

Emerging Markets Forecasts & Guidance (2022)

2022 was a tumultuous year for emerging markets as well, with many facing the twin shocks of rising U.S. interest rates and, for some, the ongoing effects of the pandemic or geopolitical issues. Stathis provided monthly forecasts for China, India, and Brazil, often with actionable trade ideas for FXI, IFN, and EWZ.

His EM guidance in 2022 was characterized by extreme caution punctuated by tactical trading opportunities. He generally recommended underweight or short-term trades in EM rather than long-term allocations, largely due to the global tightening cycle and country-specific problems. Here’s a breakdown:

China 2022: Stathis was bearish on China’s economy and stock market for most of 2022. He frequently cited China’s zero-COVID policy and the related lockdowns as a major economic drag. For example, in the July 2022 notes, he stated

“China’s zero-COVID policy is a disaster – economy now worse than 2020”.

He documented how repeated lockdowns (e.g. Shanghai in spring 2022) severely disrupted supply chains and consumer spe