2021 Recap & Trends to Watch in 2022

2021 started with chaos...

in Washington.

There was a mob attack on the Capitol Building in Washington on January 6th. Coupled with his election-related rants, this situation ultimately resulted in the sitting US President, Trump, being suspended from most popular social media platforms, most notably, his platform of choice, Twitter. While it was a terrifying/historic day for American democracy, the financial markets were largely unaffected by this. The more influential event that marked January 2021 was...

Wallstreet bets vs Wallstreet

Retail investors (specifically Redditors on a popular subreddit called Wallstreet bets) took on Wall Street and squeezed so tightly until they lost some billions. I call it, short squeeze January. Biggest winners: Gamestop, AMC, Bed Bath & Beyond, Blackberry, Nokia. Biggest loser: Melvin Capital.

Bitcoin hit over $37,000.

OTC February

Drunk off their power from taking on Wallstreet and winning, retail investors turned their sights to the OTC markets. I guess you can call this the Over-the-counter encounter. In less than 20 trading days, OTC stocks delivered 10-20x profits to anyone who got in at the start of February. It was the wild wild west. Some believe that this action was not pulled off by retail investors alone. They believe some wall street actors had a hand in it and used it to fund their losses from the Gamestop saga.

Bitcoin passed $42,000 after Elon Musk tweeted positive sentiments for the crypto and ultimately revealed that Tesla would be buying $1.5B worth of Bitcoin. He backtracked on this quite quickly but more on this later.

Then NFT March came along

Beeple sold an NFT collection, Everydays - The First 5000 Days, for $69 million. Jack Dorsey sold his 1st tweet for $2.9 million, and several others made lots of money selling digital art and memes. By the end of 2021, over $40B was spent on NFTs!

NFT March also came with a market rally for any stock that seemed like it'd create a marketplace for NFTs, the Amazon of NFTs. Companies like Takung Art ($TKAT), Dolphin Entertainment ($DLPN), Hall of Fame Resort & Entertainment Co. ($HOFV) benefited from this and saw their stocks prices rise up to 25 times in a few days!

Another wave of stimulus came in the form of President Biden's $1.9T plan, which among other things, put $1,400 in the hands of many Americans. This month also saw Bitcoin crossing $62,000.

Doge April and May

With the help of retail investors, Redditors, and the ultimate finance influencer, Elon Musk, Dogecoin kept rising to the moon ($1). It hit a high of $0.74, which marked a 12,000% increase since the start of 2021! Elon Musk ended up denying his Doge comrades when he called it a "hustle" on SNL.

On the back of this, articles with titles like "the great resignation" were making the rounds as there were worker shortages in the US, with over 9 million vacancies being recorded in April.

I already did a detailed recap of what happened in the 1st half of 2021. You can read it here.

Vaccine Mandate June

Vaccine mandates and vaccine passports became the talk of the day as more governments of developed countries kept looking for ways to get their entire population vaccinated.

Though it was largely underrated, inflation was rising in the US. The common term used to describe it at that time was transitory. Almost reminds us of how Trump described COVID in 2020

Nigeria banned Twitter on the 5th of this month because the platform took down a tweet the President made, which many users reported for inciting violence. Those who wanted to continue using the platform in Nigeria carried on with VPNs.

The Race to Space July

While athletes competed in Tokyo for a chance to win one of 3 highly coveted Olympic medals in the postponed 2020 Olympic games, Richard Branson's Virgin Galactic and Jeff Bezos' Blue Origin got into a race to space. Since Richard Branson ended up getting to space 1st, Bezos compensated himself by debating Branson's definition of "the beginning of space".

Another round of stimulus got to American parents this month too.

2 of the worst IPO flops of 2021 happened this month as well in Robinhood and DiDi. With Robinhood down almost 50% since IPO and DiDi having to delist from the US due to US-China issues. More on this later.

China's war of Big Tech August and the Delta Variant came for our Fall plans

For 40 years, the Chinese Government had minimal interference?in the Chinese technology sector. The effect of that was the rise of giant companies and billionaires.?However, that changed in August when it seemed like China declared war on Big Tech. Chinese state media labelled Tencent the spiritual opium of games. This led the company's stock price to drop by 11% on August 3rd.

August also came with a surge in COVID cases but no lockdown and Hurricane Ida in Louisiana.

September came with the start of a new, dare I say, ever grand financial crisis?

The name of one of china's largest property developers, Evergrande, started making the news over fears that it'd default on its over $300B worth of debt. Evergrande's share price dropped almost 90% Year to date.?And trading of its bonds with maturity in 2022 and 2023 was suspended after they collapsed. Evergrande's bonds were also blacklisted, i.e. could no longer be used as collateral.

Speculations about how this could lead to another global financial crisis started looming since the 2008 financial crisis was also linked to real estate. Anyways, Evergrande is currently in default, and all seems to be well in the world aside the fact that we're currently in the FIFTH wave of COVID-19. But that's not their fault.

Red Light Green Light September-October

Netflix's blockbuster, Squid Game, debuted on September 17th, and by October, the streaming platform said the series could be worth almost $900M.

A meme coin, called Squid coin (inspired by the TV show squid game), came, saw, conquered... and crashed.

Squid coin was launched on October 20th. The coin surged more than 310,000% in the week after its release to $2,861 before falling 100% to less than half a cent on November 1st after the creators of the coin yanked the $2.1 million that was invested in the coin, leaving the coin worthless.?

Meta October

Facebook became Meta and brought about one of the most popular terms of Q4 2021, the metaverse.

Tesla joined an exclusive group of 5 companies with $1T market capitalization.

In October alone, Tesla added $446bn of stock market value, equal to more than two McDonald’s - Robin Wigglesworth, The Financial Times

And like retail traders did in January, Tesla finally shook off the shorts. Short positions in Tesla — measured as a percentage of the company's freely traded shares, had by mid-November fallen to about 3%, down from almost 20% at the start of 2020, according to S3 Partners.

Nigeria launched her Central Bank Digital Currency (CBDC), the eNaira.

All the events mentioned above could be linked to just 1 month; some themes that ran the entire year was:

Oil prices roar back to life

In 2021, we saw a recovery in demand for oil, electricity, and natural gas, which caused oil prices to soar. Many oil companies benefitted heavily from this and saw their share prices soar.

Crypto boom, bust, and boom, and bust... again?

Bitcoin continued its steady rise that we talked about in our 2020 Year in View article. Hitting record high after record high after record high.

This flight to the moon as quickly stopped in its tracks in May when China started cracking down on Bitcoin mining. Then accompanied with Elon Musk's tweet about his "concern" with the environmental impact of Bitcoin mining and announced the suspension of plans to allow people to buy Tesla cars with Bitcoin, by May 19, Bitcoin's price collapsed as far as 30% to $30,000.

But like Ironman in a fight against Thanos, Bitcoin just wouldn't stay down. In late September, prices resumed their ascent when news around the launch of a futures-based Bitcoin ETF in the US started making the rounds. The launch of this ETF propelled Bitcoin to a new all-time high of over $69,000 in November.

Then in December, prices fell again. On December 4th Bitcoin fell 20% in under 10 minutes.

Popular meme coins such as Doge and Shiba had similar experiences

Elon Must!

(Not that wasn't a typo) If you look closely at every financial event involving retail traders, Elon must be somewhat involved. Elon Musk was one of the ultimate financial influencers of 2021. Second only to COVID. He could be seen in the Doge rise, Bitcoin rise (and fall).

In fact, the surest guarantee that any meme investment needed to go to the moon was an Elon tweet.

US and China at odds

US and China are at war again, only that this time it's not about trade anymore and Trump is not at the centre of it, giving us hilarious nicknames to look forward to like "Rocketman". The 2 companies that largely got the heat were SenseTime and DiDi.

The US issued sanctions that prevented Chinese AI company, SenseTime, from listing in the company on grounds that its facial programs were used to target people by their ethnicity. DiDi, on the other hand, is delisting from the New York Stock Exchange among several other reasons in hopes that this might appease Chinese regulators.

General Themes

2021 can be seen as the year of the people. The year the people put their money where their mouth is and "stuck it to the man" where it hurts. The year of Dogecoin and other crypto's wildest year yet. The "Big Guy" also did well. Tesla hit $1T valuation, and Apple is well on its way to a $3T market cap

"It has been an extraordinary year for equity formation globally - dare I say one that is unlikely to be repeated any time soon" - James Fleming, Global co-head of Equity Capital Markets at Citigroup

The S&P 500 is up 27.4% Year to Date (YTD), and if a rally happens before the end of the year, it could probably end up better than the 28.9% performance 2019 had and be the best year since 2013.

Amidst the rally, many stay-at-home, work-from-home stocks did not get the same action. E.g., Zoom is down almost 50% YTD, Amazon is up about 6%, which is fine, but compared to the 82% rise it had in 2020, is minimal. Netflix is only up 16% YTD.

"Over the last 5 years, every time it looked like there would be a rotation out of tech, everybody bought the dip. 2021 was the year investors did not buy the dip" - Jack Dollarhide, CEO of Longbow Asset Management

Initial public offerings (IPOs) around the world raised a record $594 billion in 2021 in a total of 2,097 IPOs (not including SPACs).

"It's been a really blockbuster year. We anticipate it will continue into next year. Every year you kinda think markets will go down from this frantic pace but it will still be robust" - Chris Blum, BNP Paribas Banker

Inflation scares also made people move out of growth stocks and into more value companies that would do well in a rising rate environment, e.g., financials, energy, consumer goods, industrials, and real estate.

Trends to watch going into 2022

• For the 2nd year, the number 1 trend is still COVID. Questions like how will the pandemic end, if it will ever, remain top of mind going into 2022
• Travel might get more expensive. Many airlines have been keeping fares low to stimulate demand during the pandemic. But eventually, when people start travelling again, companies would want to compensate for losses. In Europe, demand for flying is set to outstrip capacity in Summer 2022, which could lead to costlier tickets

Airline costs are also rising with higher oil prices and airport charges. Airlines would likely have to charge customers more to keep afloat. Business travel, on the other hand, is expected to fall. With the proliferation of video conferencing, any meeting that doesn't need to be face to face will probably remain virtual for cost-saving and environmental reasons.

• In 2022 we will find out if supply does not keep up with the surging demand for oil, more price inflation can be expected
• Of course, there's Web3 which is a collection of blockchain-based technologies that support a more decentralized version of the web — one where users, rather than giant tech companies or intermediaries, would be in control. In 2021, we saw more of its application in DeFi, or decentralized finance and non-fungible tokens. The hunt for more mainstream uses of Web3 will likely preoccupy large parts of the tech industry in 2022
• Inflation is another big one to watch out for. The Central Banks of developed nations are already hinting at raising interest rates in 2022 to combat this. And if that happens, it might spell the end of the rally for many growth stocks for reasons explained in this article.

Final Thoughts

Even though it seldom feels like it, the world gets better in most years. We often miss the gradual progress we make in technology, social constructs, and production because, as humans, we tend to focus more on the negatives, the catastrophe in the news.

This year has been one of immense growth for me as well. Between the 2 platforms I actively post on, Twitter and LinkedIn, I have access to an audience of over 50,000 people who subscribed/followed for (and maybe are interested in) my finance-related content. If you check out the article I wrote at the end of last year, this number is double what I started the year with! Our community is moving steadily to the moon! ???? For context, Bitcoin is only up 60% YTD while we're up over 100%. It seems our community is outperforming Bitcoin ?? If you'd like to join our community to the moon.

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2021 has been a year of learning for all of us. We've been forced to learn, grow and change so much in such little time. Thank you so much for sharing your time with me by reading my articles sharing and commenting on them. I appreciate you. Thank you to the LinkedIn team for giving me the platform to share.

I hope you had a Merry Christmas, and I wish you a Prosperous New Year. See you on the other side

2022 is going to be another rollercoaster. Fasten your seatbelts, don't forget to try to enjoy the ride