Posted on February
23,
2022 by Bailey Crumpton. Tagged:
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Colorado Companies,
For Candidates,
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For Clients
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.
How The Market’s Changed
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…
- Cryptocurrency
- Despite their volatility, crypto assets continue to find their way into more investors’ portfolios. In fact, one in six adults in the US have invested in cryptocurrency, and the total ‘alternative assets’ are forecasted to exceed $17 trillion by 2025. Talk about trendy. Largely driven by advancements in financial technology, tokenization has modernized how assets are offered by breaking them into bite-size pieces that smaller investors can afford. But as crypto matures, it will also receive more attention and regulation. Biden’s recent infrastructure bill, more on that later, requires all crypto exchanges to notify the IRS of their transactions, showing that with substantial activity comes substantial regulation. The hope is that government regulators will work with crypto assets rather than regulate them out of existence.
- Despite their volatility, crypto assets continue to find their way into more investors’ portfolios. In fact, one in six adults in the US have invested in cryptocurrency, and the total ‘alternative assets’ are forecasted to exceed $17 trillion by 2025. Talk about trendy. Largely driven by advancements in financial technology, tokenization has modernized how assets are offered by breaking them into bite-size pieces that smaller investors can afford. But as crypto matures, it will also receive more attention and regulation. Biden’s recent infrastructure bill, more on that later, requires all crypto exchanges to notify the IRS of their transactions, showing that with substantial activity comes substantial regulation. The hope is that government regulators will work with crypto assets rather than regulate them out of existence.
- ESG Funds
- Dating back as far as the 70s, investing in socially responsible funds is not a new idea. 83% of global investors in a survey said that ESG-integrated portfolios are likely to do as well or better than non-ESG-integrated portfolios. Many people felt as if the pandemic was a wake up call on sustainability, as going into lockdown gave the planet a breather, literally, the likes of which it has not seen in decades. Due to this growing investment and prioritization of the environment, 77% of wealth funds, insurers, foundations and pension funds surveyed increased their ESG investments within the last year according to Businesswire. But is the proof in the pudding? Studies say yes, and show that socially and environmentally responsible companies are actually less likely to go bankrupt and were more resilient during the recession. From January 2021 to September 2021, net cash flows into ESG mutual funds were higher than all of the cash flow from 2020. ESGs will continue to gain visibility as new investment opportunities also grow.
- Dating back as far as the 70s, investing in socially responsible funds is not a new idea. 83% of global investors in a survey said that ESG-integrated portfolios are likely to do as well or better than non-ESG-integrated portfolios. Many people felt as if the pandemic was a wake up call on sustainability, as going into lockdown gave the planet a breather, literally, the likes of which it has not seen in decades. Due to this growing investment and prioritization of the environment, 77% of wealth funds, insurers, foundations and pension funds surveyed increased their ESG investments within the last year according to Businesswire. But is the proof in the pudding? Studies say yes, and show that socially and environmentally responsible companies are actually less likely to go bankrupt and were more resilient during the recession. From January 2021 to September 2021, net cash flows into ESG mutual funds were higher than all of the cash flow from 2020. ESGs will continue to gain visibility as new investment opportunities also grow.
- Decarbonization
- On a similar note to ESG Funds, investments around decarbonization are also on the rise. It’s common knowledge that each new year breaks the previous year’s record of being “the hottest year on record.” As we continue to witness extreme weather events across the globe, it’s a good thing that the pandemic accelerated global attention on climate. Retailers and governments alike are taking this important topic to heart, and not just because of profits, but because it’s the right thing to do. World leaders continue to collaborate to drive international efforts against climate change, while many people are now more aware of how their actions impact the environment. This means more investment in everything from renewable energy sources to sustainable business practices like resource-saving software programs in construction, food production, and healthcare.
- On a similar note to ESG Funds, investments around decarbonization are also on the rise. It’s common knowledge that each new year breaks the previous year’s record of being “the hottest year on record.” As we continue to witness extreme weather events across the globe, it’s a good thing that the pandemic accelerated global attention on climate. Retailers and governments alike are taking this important topic to heart, and not just because of profits, but because it’s the right thing to do. World leaders continue to collaborate to drive international efforts against climate change, while many people are now more aware of how their actions impact the environment. This means more investment in everything from renewable energy sources to sustainable business practices like resource-saving software programs in construction, food production, and healthcare.
- Virtual Real Estate
- Real estate has always been a vital way to increase personal wealth. For the long term, putting your money into property has a comfortable and almost guaranteed return. If you’re considering additional real estate investments, you should also look into virtual real estate. And no, we don’t mean in the Metaverse. Virtual real estate refers to the software platforms that helps people search for and invest in property. Due to the pandemic, even this paper-dependent industry is moving to more virtual interactions and customer service. Keep tabs on this growing trend because even after the pandemic, electronic paperwork was already on track to becoming the norm. Companies like Maxwell and FinFlux are even crafting new approaches to bringing greater equity to the mortgage lending and home buying space, and present a huge market opportunity.
- Real estate has always been a vital way to increase personal wealth. For the long term, putting your money into property has a comfortable and almost guaranteed return. If you’re considering additional real estate investments, you should also look into virtual real estate. And no, we don’t mean in the Metaverse. Virtual real estate refers to the software platforms that helps people search for and invest in property. Due to the pandemic, even this paper-dependent industry is moving to more virtual interactions and customer service. Keep tabs on this growing trend because even after the pandemic, electronic paperwork was already on track to becoming the norm. Companies like Maxwell and FinFlux are even crafting new approaches to bringing greater equity to the mortgage lending and home buying space, and present a huge market opportunity.
- Hemp CBD Market
- You’re probably aware that many states in the US have legalized medical and recreational marijuana. However, are you aware of just how big the industry is now? From national edible operations to cannabis beauty products to CBD tinctures, countless people are buying and investing in cannabis products. In this way, the cannabis stock market has only grown as the industry goes through massive horizontal and vertical integration. It’s also noteworthy that here in Colorado, the industry has only experienced growth since its inception and legalization. With over $2.22 billion in sales, Colorado celebrated yet another milestone of breaking its own record in marijuana sales. It’s certainly an interesting and high-growth sector to consider putting money into.
- You’re probably aware that many states in the US have legalized medical and recreational marijuana. However, are you aware of just how big the industry is now? From national edible operations to cannabis beauty products to CBD tinctures, countless people are buying and investing in cannabis products. In this way, the cannabis stock market has only grown as the industry goes through massive horizontal and vertical integration. It’s also noteworthy that here in Colorado, the industry has only experienced growth since its inception and legalization. With over $2.22 billion in sales, Colorado celebrated yet another milestone of breaking its own record in marijuana sales. It’s certainly an interesting and high-growth sector to consider putting money into.
- Cloud Infrastructure
- Finally, if you’re in tech, you’re probably familiar with the term Software as a Service (SaaS), Infrastructure as a Service (IaaS), or Platform as a Service (PaaS). Long story short, the cloud connects us all, and one way or another, we all rely on cloud technology in our professional and personal lives. The boom of business online and remote work has merely accelerated the importance of cloud computing technology. The demand for online data storage and the ability to quickly transfer information across dispersed teams has led cloud storage stocks to soar. Tech companies are racing to put their personal stamp and functionality on this growing technology. You can stand to make huge amount of money by investing in cloud technology, as the market size for cloud computing is expected to increase from 3 billion in 2021 to USD 947.3 billion by 2026.
Money Flows Where Attention Goes
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.
Colorado Is Having A Moment
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?
Here at BWBacon Group, we know and live what you are experiencing as an employer or job seeker in Denver, Boulder, Dallas, San Francisco, New York City or any of the other cities we work in. We believe great recruiting starts and ends with understanding people.
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