After living through a thankfully short-lived recession due to the pandemic, the market has seen unpredictable highs and lows over the last two years. Public stimulus checks paired with high inflation cascaded into market liquidity, and on top of that, suddenly everyone in the US was trying to move and snatch up homes, especially in the Front Range in Colorado.
The question is, will 2022 see some of these imbalances neutralize? Will normalization mean more of the same, or will we continue to see new market highs and a tight labor market? With so much fluctuation, it can be hard to predict where or when to invest your money. Only time will tell, but we’re following these investment trends that are gaining steam this year.
As always, making predictions about the stock market is a tricky endeavor, and 2022 is no exception. While the S&P 500 rose over 27% in 2021, managing director and chief investment strategist at Charles Schwab Liz Ann Sonders says, “there are so many unique uncertainties right now, including the virus that, sadly two years later, we don’t have in the rearview mirror.”
So while the general outlook is optimistic, some economists are feeling a sense of déjà vu in that the government will continue to be a big factor in influencing the market’s trajectory and dealing with inflation. However, most experts agree the economy is on more solid footing, leaving plenty of opportunity for investment and growth. As expected, tech, the largest sector in the S&P 500, will remain vital and shows no signs of slowing down. Here’s 6 investment trends to follow…
What other factors are going to influence the market this year? If there was ever a snowball effect, we see it happening in the current U.S. labor market. Not only are employees seeking new leverage, changing jobs, and negotiating for higher wages, but workplace safety concerns and early retirements are all driving labor costs higher for companies. While it ultimately may weigh on profit margins, the increased attention on pay equity, employee wellness, and corporate responsibility may start to shift the distribution of wealth rather than quell it. We predict we’ll see more push and pull in the labor market, especially for tech companies hiring software engineers and developers.
Financial advisors will also be paying close attention to tax changes happening as a result of the Build Back Better Act. This bill is intended to target wealthy individuals and corporations, and changes in corporate tax rates can potentially impact overall earnings. One way of looking at the Build Back Better plan is to consider it a manifestation of other social and market trends, a vehicle for evening the scales and for small businesses to succeed in competitive industries.
As we mentioned earlier, younger generations lean towards ESG funds for accumulating wealth, so in turn, investors are looking to corporations to consider their broader social impact. In January, regulators set out a global framework to refine ESG investment ratings and help combat “greenwashing,” or overstating the environmental credentials of an investment. This means that investors will have more ways to reflect their values in their portfolios in 2022 and beyond.
Most conversation around investing revolves around big stocks and conglomerate funds, but what about investing locally? Colorado startups shattered venture fundraising records and raked in over $6.5B in 2021. Axios Denver crunched the numbers and found that this was nearly 170% growth as compared to the previous year. Why does it matter? Local startup funding shows that Colorado continues to be a breeding ground for high-growth companies that are shaking up global industries.
It’s not just Denver either. While Denver companies saw $2.3B invested in the fourth quarter, Boulder startups received $1.8B across 127 deals and Colorado Springs saw $209M across 10 deals. The industries attracting this level of capital range from healthcare services to fintech to AI and cybersecurity. We’ve witnessed this growth firsthand, as we work with incredible local clients in nearly all of these sub-industries. In general, Colorado brings a level of branding itself that enhances a business’ opportunity for growth, not to mention being an incredible place to live and do business. What do you plan on investing in this year?
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