This season of the pandemic has certainly had its losses but not when it came to the return on S&P 500 with last year’s total return at more than 27%. The question is will this year hold last year’s bull market by the horns or should stockholders and traders be ready for a different kind of year; one that will require investment strategy within specific markets?
Inflation Isn’t Over Yet
If inflation was not an issue for some in 2021 it certainly will be in 2022. Supply chains continue to be held up and gas prices are still increasing. It’s obvious that neither of these will be letting up anytime soon which will lead to an even greater year of inflation. If one is thinking outside the box, it may be a good time to invest in the bond market.
Federal Reserve Rates Expected To Spike
The days of ZIPR have already started to turn a corner. What investors need to be thinking about is how many spikes are likely to happen this year. CME’s FedWatch Tool predicts at least two rate increases that could start as early as spring. Though this will create a cautious and defensive environment there is still the opportunity to make money within certain industries and market sectors.
REITs And Homebuilder Stocks Hold Promise
REITs, or real estate investment trusts are companies that own and/or operate properties like office buildings, apartment complexes, warehouses, and shopping malls. Last year, the Morningstar REIT index rested at 39.2%; 10% more than S&P 500 and is only predicted to increase.
Though there is a settling happening in the home building industry there is still high demand in the new homes market which is mostly due to the shortage of previously owned homes.
Limited Workforce Continues To Drag Down Public Companies
Some people have been able to get back to work whether that be back at the office or at home in front of their computer but that isn’t the case for everyone. Some states are still paying out unemployment causing workers to cash in rather than get back to work while working moms are having to juggle working from home, childcare, and kids learning from home. With workers not wanting to come in to make a paycheck and families juggling the residual effects of Covid, public companies are barely keeping their heads above water.
The Five Tech Giants
Here’s where you really know what’s happening with the stock market. From Meta, Amazon, Apple, Netflix, Microsoft, and the parent of Google, Alphabet; these tech giants typically lead the way in various rotations with Microsoft and Google taking the lead last year. However, combined total market returns for 2021 contributed less than 3% leaving some analysts pointing investors in other directions for 2022.
The fact is, this pandemic was not expected to roll out this long, and with the new variant becoming this year’s spotlight it’s still challenging to know how to navigate the ebbs and flows of the pandemic effects on various markets but there’s still promise of seeing returns if stockholders and traders know who they’re working with.