Much like 2020, 2021 won’t be forgotten so easily. Investors of all types will remember the infamous “stonks,” event stemming from the Reddit community r/WallStreetBets. AMC, Upstart, and most notably GameStop were suddenly trading at high prices when the companies themselves were worth little. It turned the industry on its head and got investors wondering what could happen next. Investing Trends –
Thankfully, the experts of Money Morning have some insight on what to expect for the new year.
Investing in Today’s Market- Investing Trends
Aside from “stonks”, there were many other things that made 2021 a crazy year. Everything from used cars to food shortages created crazy price hikes. Cost increases like this are likely to continue thanks to inflation.
Inflation is not made up of one thing. It’s made of many components working together and is one of the reasons the economy is so complex. According to the experts at Money Morning,
“Each component is in play today in a way they haven’t been individually or collectively for decades. We will see many of the component pieces of inflation explode and implode in the quarters ahead and move and shake markets in the process.
The experts at Money Morning also agree that younger investors playing by their own rules are here to stay. They are primed to be a huge factor in the new year.
Another factor that might have a huge impact is China’s economy. In the last four decades China has not had a Great Recession or a depression. But no economy is impervious to slowdowns. As one Money Morning contributor put it,
“On the outside, China seems to be the dragon of legend that has come to life. But underneath what you find are actors holding up an elaborate dragon costume.”
The Risks and Benefits of Investing
Even without Reddit interference, stocks can be risky. If you’re not careful you could lose your entire investment. Trading is also stressful if you don’t have a plan in place or fail to diversify your portfolio.
But despite the events of last year there are still many benefits. Trading is becoming easier with websites and apps. You can create an account and start buying in moments. You can also easily sell stocks that aren’t performing well. The important takeaway is to ensure you have a plan and a sense of what trends are on the horizon.
What Investing Trends Can You Inspect
Here is a little preview of what 2022 investing trends could be like. Tons of tech stocks were sold off towards the end of 2021. But according to Money Morning experts there may be a rebound for tech stocks,
“Especially in the second half of the new year. We’re likely to find solid strength among large-cap tech leaders.”
The reason may have to do with large-cap tech companies being able to afford to keep prices steady. As smaller tech companies raise prices to keep up with inflation, bigger companies like Apple have the means to skip price hikes. That’s why the contributors of Money Morning think buying Apple stock (AAPL) could be the way to go
Another stock to consider is Nvidia Corp (NVDA) since it’s used in many fields like electric vehicles, AI, and computers.
The stocks to avoid are the so-called “COVID plays.” These are stocks like Zoom Video Communications Inc. (ZM) and Teladoc Health Inc. (TDOC). While Zoom and Teladoc have been used heavily in the pandemic, both of their stocks are 55% less than their previous highs.
What to Know Before Investing
Before you jump into the market with fistfuls of cash, there are a few things to think about, like:
- Your goals. What do you plan to gain? How much can you honestly put into the market?
- How much risk are you really willing to take? Can you afford to lose money? How much? Are you comfortable with taking risks if there’s a chance for a big payout? Or do you want a stock that’s steadier and pays dividends?
- Mix it up. This advice is repeated a lot because it’s true. You don’t want to bet your nut on one sole business or stock. Having a mix of different stocks ensures that you’ll be OK if one industry goes south.
- Watch emerging industries. See how they develop before going in.
According to Money Morning contributors, there are a few businesses that may be on the rise. One such business is cannabis. More states are legalizing the plant for various uses. Cannabis beverages and tech may take off. Also be on the lookout for distribution. There may be some innovation there soon.
Other businesses to consider are NFTs and Ethereum. Experts at Money Morning predict that Ethereum could go as high as $12,000 this year seeing as it rose 983% last year.
How Money Morning Can Help
Trading is tough business. Without solid, actionable information, whatever you put into the market could be gone quickly. This is where Money Monday can help. It doesn’t matter if you’re planning your retirement or just starting out, we’ll give you reliable information that can help you reach your financial goals. Contact Money Morning today to see what we can do for you and your portfolio.