As we move further into the 2020s, investors need to stay ahead of the curve. For example, nobody saw the pandemic coming – except for those who saw what was happening overseas and took the appropriate actions.
If you weren’t among them, make 2022 the year where you anticipate rather than react. So, in this piece, we’ll take a look at trends likely to have an impact on the stock market this year.
So without further ado, let’s get started!
2021: A Year of Terrifying Gains
On the surface, 2021 was an excellent year for investors. From end to end, the Dow Jones saw gains of 18.7%. Over on the NASDAQ, it was even better, as the tech-heavy index surged a whopping 21.4%. And the S&P saw a mind-boggling 26.89% rise.
But if you looked closer, it was a bumpy ride. With COVID, inflation, and supply chain headaches, gyrations of 1% to 4% were not uncommon.
Then Omicron hit, sending the Dow Jones down more than 6% throughout November. However, as more data emerged indicating a milder strain, markets ended the year in fine form.
Looking Ahead to 2022: What on Earth Will Happen?
But what will the markets do in 2022? Nobody knows for sure, but let’s make some educated guesses. Here are three key business trends that investors should be aware of:
Omicron/COVID Still a Threat
Over the past two years, the pandemic has been the prime driver of volatility. Exhibit A: the stock market losing 40% of its value over three weeks in March 2020… then re-gaining it (and then some) within a few months.
Things played out the same way in November 2021 with the outbreak of Omicron. At the start, hand-waving hysteria over grotesque mutations led to several hard days. But since then, the market has recovered fully.
So, is the pandemic not a big deal anymore? Far from it – Omicron’s latest mutations gave it the best immune invasion tactics of any variant so far. All it would take is another unfortunate mutation to truly set us back to square one.
This reality means that we should continue to be vigilant, but that doesn’t mean you should panic sell at first sight of trouble. Instead, it means you should diversify across asset classes and set cash aside.
This way, if disaster strikes, you’ll be okay, even if your portfolio takes a beating.
Penny Stocks Will Become Even More Popular
In case you’ve been hiding under a rock, the retail investor is back. Empowered by platforms like Robinhood and forums like /r/wallstreetbets on Reddit, the little guy is taking on the establishment.
And penny stocks are leading the charge.
Penny stocks – those that trade for under $5 per share – used to be seen as a last resort for desperate investors. But in today’s market, they’re becoming a popular way for everyday people to sink money into up-and-coming companies.
And it’s not hard to see why. With favorites like Tesla, Apple, and even Gamestop out of reach, penny stock offer an affordable way for the average person to invest.
Mainstream stock markets, despite recent turbulence, is still near all-time highs. So, barring unforeseen economic trauma, the party should continue unabated. The same should hold true in the OTC, or over-the-counter markets.
That said, penny stocks are still a high-risk investment. Many of these companies have no revenue and little to no profit. So if you’re thinking about investing in them, do your research first. By looking for news on penny stocks to watch on reputable sites, you’ll stand a better chance of avoiding scams.
Emerging Technologies Will Continue To Drive Wealth Creation
In 2021, we saw the continued rise of blockchain technology and artificial intelligence (AI). For example, smart contracts have seen an increasing adoption rate in the fintech industry, and AI has sped up progress in sectors like biotech.
What will 2022 bring? We can only speculate, but we’ll likely see more impressive advances in these cutting-edge fields.
For example, blockchain will continue to find novel applications in all industries – only the gap in understanding between generations will limit its growth.
And as AI becomes better at understanding human behavior, it will become more effective in areas like customer service and fraud prevention. This development is massive for the burgeoning e-commerce sector, which grew a staggering 32.4% in 2020.
Volatility, Change Still the Name of the Game
2022 looks like it will be another year of volatility and change. The markets will see-saw sharply on the latest headlines – but we’re all used to that by now, aren’t we?
So, diversify your portfolio, stay informed about global events, and remember: nobody can predict the future. But by taking an intelligent approach to markets, you’ll usually come out on top.
