We mention above that inflation usually leads to a rise in stocks as they offer a high positive real return. The prevailing belief is that in an environment of high interest rates the technology sector does not perform well. This is partly true, as it's the money-losing tech companies that do not perform well and not the tech giants with ultra-strong turnovers and cash reserves.

Another fact that is the leading hand for 2022 is that the Fed will find itself in a cycle of tightening monetary policy. Summing up the last 10 tightening cycles of the Fed, the stocks have a positive return which, two years after the first interest rate increase, reaches 40%. That is, 100% higher return than the average annual return of the last 20 years.

However, for the story to be valid this time as well, there must be some basic assumptions.

The first and most basic is to have a slow rise in interest rates. This shows that the economy is growing and that rising interest rates are coming as a natural development. For now, this is just an assumption, as the Fed, while initially communicating it correctly, has resorted to very aggressive rhetoric over the past month, which should not be confirmed.

Secondly, as in the past, this time too, the start of a cycle of rising interest rates finds some sectors highly valuated. In our view, if interest rates rise slowly, this is not a problem because the potentially high valuations are associated with 10 shares out of a total of 500 shares of the S&P 500. Based on the above, the aggressive portfolios of XSpot Wealth are thus composed and are expected to be composed even more appropriately to achieve the desired dispersion and benefit from the beginning of the interest rate rise cycle.