There’s no doubt that investing remains one of the best ways to preserve and create wealth in the modern age, but that nevertheless comes with the proviso that what one chooses to invest in has to be wisely chosen.
It’s no surprise then that for 2022, the market will continue to be heavily influenced by how the Covid-19 pandemic plays out and how policy makers respond to the subsequent economic challenges both globally and locally. Once again, we are likely to see stronger performances in technology-related sectors. With the advancement over the past two years, it’s actually starting to feel more like 2032 already.
Digital technology, The Internet of things
Digital technologies in general have enjoyed steady growth during 2021, gathering momentum which is likely to continue throughout 2022. Added to this are signs that the semiconductor chip shortage may also begin to ease by the second half of the year, which is really good news.
Over the course of the pandemic the internet of things (IoT) has grown in popularity, mostly as a result of remote working, triggering a wave of private purchases in smart devices, wearables, home computers, and mobile phones. At an organisational level we are also seeing a shifting in spending patterns towards a more sustained investment in their digital initiatives as they race to modernise their systems to accommodate a changing workforce.
This business transformation will also be supported by the increased availability of 5G. It delivers more reliable, higher bandwidth, and lower latency data transfer to the next generation of IoT and digital devices. In turn, this will continue to drive cloud migration: with increased infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and softwareas-a-service (PaaS) growth.
Healthcare industry, Biotech
Expect the science of genetics to continue to make massive changes to the world around us. The mRNA technology that is being used in Covid-19 vaccines is only the tip of the proverbial iceberg. Research is becoming ever more expansive, with new discoveries almost weekly. Healthcare will inevitably become customised around the human genome, with more personalised medical treatments based on individual DNA characteristics emerging. Already there are a growing number of gene therapies in the works.
One must therefore consider how both medical and life sciences are increasingly collaborative in developing new innovations. There is exponentially more data shared across pharma, biotech, biology, biomedicine, nutraceuticals, neuroscience, and a host of environmental sciences than ever before.
We’re also seeing an uptick in digital assessment & diagnosis, from remote doctors’ appointments, to virtual clinics, and to IoT health wearables of every kind. Virtual diagnostics and telepractice is becoming mainstream.
Machine learning and AI, The rise of bots
Artificial intelligence (AI) will also continue to progress in leaps and bounds, along the path to becoming the most transformative technology ever. Machines may not quite be ready to replace human workers in 2022, but we are working with or alongside machines that use cognitive processes on a daily basis . Every day we engage with more and more artificially inspired agents at a service level, with low-code and no-code AI being used to construct more and more complex engagement.
In marketing, AI is refining qualified leads into more conversions. In engineering, AI and machine learning are being used to predict wear and tear, and for predicting maintenance interventions. In cybersecurity, Ai is learning to recognise patterns that suggest types of cybercrime.
Renewable energy, Sustainability
Since the dawn of the pandemic, the only form of energy that has seen an increase, is renewable energy and the International Energy Agency (IEA) estimates that as much as 40% more renewable energy will be generated and used during 2022 alone.
Beyond that, emerging energy sources such as biofuels, liquid hydrogen, and even nuclear fusion continue to become more viable. We have seen an unprecedented number of extreme weather events and other climate impacts take their toll on people’s lives and health in 2021. That these escalating extreme weather events, which kill thousands and disrupt millions of lives, are led by global warming, is hard to deny.
This is why the upcoming COP26 global climate summit in Glasgow this November is also likely to drive even more investment in sustainable energy and cutting back of emissions.
Crypto currency, Bitcoin
Over the last decade, cryptocurrency has proven to be very lucrative. It has overtaken stocks, commodities, oil, and even gold, not only as an apparent hedge against inflation, but also against systemic risk. Nonetheless, it remains a very volatile medium of exchange.
Bitcoin first breached the $1000 mark in early 2017, then rose rapidly to briefly touch around $20 000 before falling back, towards the end of the year. As the Covid-19 pandemic started suddenly, in October 2020, bitcoin breached $10 000. It then soared up to around $65 000 by April 2021. Despite several drops and recoveries, it is currently hovering around $60 000; hardly the type of stability one would expect from a global form of exchange.
In 2022 we are likely to see more big names considering bitcoin payments for product purchases, with both Amazon and Tesla having toyed with the idea in 2021. Countries, especially those in the developing world, may soon follow. El Salvador officially adopted bitcoin as legal tender in September 2021, attracting praise from parts of Latin America and Africa.
China’s banning of mining operations and stricter regulations imposed by the US treasury have affected crypto, but to a lesser degree than expected. These currencies will have to accept future regulatory and legislative measures to prevent their use for money laundering and other illegal purpose, but this will hopefully serve to strengthen them in the end by making them more stable.
Nevertheless, considering the crypto market is still marked with uncertainty and speculation, it is best to not invest what you cannot afford to lose.
So, what should you do?
Don’t fall into the trap of assuming your investments only need to be reviewed infrequently. Markets are dynamic, more so than ever and you need to be ready to change your tactical position or instantly seize opportunities.
Beware of opportunistic projects and projections. Do your research and ensure you’re committing to a bona fide entity. Formulate an extensive view of a variety of investments based on value and potential and keep your portfolio diverse. Don’t be afraid to be pro-active. And don’t rely on luck. Be smart in 2022 and beyond.
Jacobus Brink (Head of Investments at Novare Investment Solutions)