As the start of a new year fast approaches, all New Jersey investors, including workers with a 401(k), need to take a fresh look at their portfolios so they can get in sync with changing conditions.

That’s the recommendation of Ken Kamen, president of New Jersey-based Mercadien Asset Management.

He said a lot of people that have counted on the S&P 500 in their 401(k) because they owned an index fund, have relied on the big name growth stocks doing well but "in a rising interest rate environment, future earnings that aren’t even there yet are priced lower, so the expectation for growth stocks as interest rates go up really could get dampened out."

So what should you do?

“I think that people might want to look to rebalance maybe away just from straight S&P 500 and look at more kind of cyclical — the consumer staples, the industrials, the materials,” he said.

“If you’ve been relying on growth stocks and those stay-at-home names to fuel your returns, you might want to broaden that out over the coming year.”

A screen above the trading floor of the New York Stock Exchange
A screen above the trading floor of the New York Stock Exchange (AP Photo/Richard Drew)
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He said with the supply chain disruption crisis continuing, “we’re going to start seeing a lot of countries, here in the United State and the developed world, start on-shoring a lot more manufacturing and warehousing a lot more products.”

Kamen said the same scenario will also play out in Europe and other parts of the world so “people need to really re-think their allocations, I don’t think 2022 is going to be a year where you just leave your portfolio on autopilot.”

He said the idea is to begin moving from the things that have been working “into things that are likely to work as the world kind of re-inflates itself and manufacturing starts shifting from the undeveloped world to the developed world.”

What does this mean for 2022?

I actually think that 2022 could be a very, very good year for the market as we all start thinking about COVID in a little bit more of an endemic type of way that we’re going to have to live with,” he said.

Kamen noted as inflation begins to tick up it will be positive for equities because companies “wind up getting pricing power back at a time when people are flushed with cash.”

You can contact reporter David Matthau at David.Matthau@townsquaremedia.com.

Red flags for someone who claims to be from New Jersey

NJ teachers and educators caught in sex crime busts

Over the past few years, state lawmakers have taken on the challenge of dealing with accused child predators among the ranks of teachers and educators.

In 2018, the so-called “pass the trash” law went into effect, requiring stricter New Jersey school background checks related to child abuse and sexual misconduct.

The follow individuals were arrested over the past several years. Some have been convicted and sentenced to prison, while others have accepted plea deals for probation.

Others cases are still pending, including some court delays amid the COVID-19 pandemic.