17 min read 

In 2021, the world was busy comprehending the new reality and searching for the new “normal”. Governments, businesses, social institutions, and every single one of us have been looking the ways out of the Covid-induced hardships. So, how did it work out? We’re up to the year-end wrap-up: what economic events are believed to be the most impactful, how these events reflected on the best stocks of 2021, and what to expect from 2022. 

The Great Reset

Capitalism as we know it is dead,” said the World Economic Forum officials about “The Great Reset” during the annual Davos summit in June 2020. Back then, a controversial initiative was voiced: to use the dramatic pandemic experience as a chance for a total change of the world economy principles. The main idea was to transform global governance into stakeholder capitalism — a model where governments are no longer the main decision-makers, and corporations are promoted to official stakeholders in the global agenda. 

Although that was just a suggestion with no clear roadmap, many industries have begun to rethink their working schemes under the Great Reset model in 2021.  

Who are these non-governmental stakeholders? 

  • Big Oil (Saudi Aramco, Shell, Chevron, BP)
  • Food producers (Unilever, The Coca-Cola Company, Nestlé)
  • Big Tech (Meta, Google, Amazon, Microsoft, Apple) 
  • Big Pharma (AstraZeneca, Pfizer, Moderna)

It’s clear that these companies will be getting more and more authority and power in the upcoming years. Some already call it the “fourth industrial revolution”. So there’s a chance that in 2021, we witnessed the biggest global governance reboot since the United Nations formation during World War II. Of course, it is difficult to say how this initiative will turn out for the world community, but stock investors are sure to have an interesting time ahead.  

Global vaccination and new lockdowns

The Covid vaccine rollout was unquestionably the most anticipated market event of 2021. Dozens of pharma companies entered the race, presenting their versions of the drug to stop the pandemic. The worldwide march toward mass vaccination created a huge market for COVID-19 vaccines and drugs, fueled by government, non-profit organizations, and investor money — over $26 billion in total

As a result, the WHO recognized the vaccines by Pfizer / BioNTech, Moderna, AstraZeneca, Johnson & Johnson, Sinopharm, and Sinovac. By the end of 2021, almost 9 billion shots were given, bringing the frontrunner manufacturers a whopping profit of $1,000 per second. This resulted in pharma stocks being among the top stocks of 2021.

Best Covid-19 vaccine stocks 2021*

BioNTech SE ADR BNTX

+223.99%1Y change
Pfizer, Inc. PFE

+31.75%1Y change
AstraZeneca PLC ADR AZN

+7.54%1Y change

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Due to the high vaccination rate and the decrease in the number of cases, the Covid-sensitive industries began to slowly recover. Thus, the total growth of energy stocks on the IQ Option platform amounted to 3.68%, the Industrials sector (which includes capital goods, commercial services and supplies, and transportation services) — by almost 10%.

However, the emergence of Delta and Omicron variants have tarnished encouraging recovery forecasts, showing everyone how fragile our current state of progress can be.

Supply chain chaos

The supply chain crisis has come to the fore as one of the greatest challenges of 2021. Late deliveries have hampered global production, causing an increase in costs and prices. Sick and tired of lockdowns, people were eager to spend money again but found that the goods were either unavailable or much more expensive. It was caused by a number of reasons:

  • Covid-induced shutdowns;
  • Labor shortage; 
  • The lack of components; 
  • The lack of raw materials;
  • Power shortages in China;
  • Shortage of truck drivers in the USA, Germany, and the UK;
  • Panicking retailers massively buying goods in advance;
  • Backlogs at ports, etc.

Bottlenecks were found at every link in the supply chain and affected almost every sector, primarily electronics and automobiles (exacerbated by semiconductor shortage), food, medicine, and household products.

The pandemic has highlighted how highly interdependent all parts of the supply and production chain are. Analysts expect the supply crisis to drag on into 2022 and beyond, and the recovery time is industry-specific since different industries rely on the global supply chain in different ways.

Energy crisis

2021 has revitalized the energy sector, albeit in a peculiar way — thanks to the energy crisis. Just when the world had begun to massively abandon fossil fuels in favor of renewable energy sources, it is craving oil and gas again. Artificially low interest rates, Covid-caused supply chain disruptions, a decrease in gas supplies from Russia to Europe, and simply a cold winter — all this created an unprecedented demand for traditional fuel. As a result, crude oil was up 52% to $71 per barrel this year.

Other reasons for the crisis are the ESG (Environmental, Social and Corporate Governance) and carbon divestment trend resulting in the demonization of fossil fuels. Because of this, institutional investors and governments are withdrawing classic fuels from their portfolios and redirecting capital towards more socially accepted low-carbon alternatives. The crisis looks sure to move into the end of 2022 — for as much as Greta Thunberg hates it, oil and gas seem to remain in demand in the upcoming years; however, the market is often volatile and unpredictable thus, the risk always entails while investing in such products. 

Top energy stocks 2021

ConocoPhillips (COP)

 +92.2%1Y change
Devon Energy Corp. (FSLR)

+165.83%1Y change
EQT Corp (EQT)

+43.21%1Y change

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Meme investing boom

Usually, stock price depends on objective factors: financial indicators, political agenda, etc. But 2021 gave birth to a new phenomenon called “meme stocks”. They dramatically change their value based on the retail investors community’s action. The most memorable examples are AMC, Nokia, and GameStop, whose stock prices have been squeezed higher by the traders community.

It all started in the WallStreetBets forum for amateur investors on Reddit. Its users communicated with each other using memes and traded stocks of little-known companies, hoping for their growth. Serious investors didn’t take the community seriously though, because their predictions often turned out false.

In 2021, many people were staying home, sitting on a pile of extra money and having more time to participate in the markets. By 2021, the WallStreetBets community had grown to 8 million members. It wasn’t funny anymore: their actions began to influence the stock market for real. After the GameStop stock incident, which at its peak rose from a couple of dollars to $400 per share, even famed analysts began to keep an eye out for the “silly” Reddit forum.

What are the characteristics of meme stocks?

  • Rapid growth — stocks may go many times higher.
  • Growth for no apparent reason. Often, such stocks spike only due to a massive speculative impulse. The company itself might be in a deep crisis.
  • High volatility — since the dynamics of an asset depends on the sentiment and not on the fundamental assessment of business value, financial management quality, and risk assessment.

While meme investing is of little interest to serious traders, the 2021 meme mania speaks to the rise of the retail investor, accounting for roughly 23% of all U.S. stock trading this year — double the number of 2019.

Semiconductor shortage

Сar and electronics prices have skyrocketed this year. The reason for this is the lack of semiconductors aka microchips. Chips are essential for any product that contains electronics, so the limited supply has had a huge impact on manufacturers.

Semiconductors shortage was caused by new Covid restrictions in the main centers of chip production: Malaysia and other Southeast Asian countries. To meet the growing demand for semiconductors, it is necessary to build large production facilities, which will cost billions of dollars and take years.

Several chip manufacturers are already picking up the pace: for example, Intel, Samsung, and Nvidia have announced the construction of new plants. As a result, investor interest in semiconductor companies has grown, especially those with factories in South Asia, where production costs are lower. The crisis is expected to drag on until the end of 2022, but overall, the industry is booming now.

Best semiconductor stocks 2021

NVIDIA NVDA

+106.96%1Y change
Advanced Micro Devices, Inc. AMD

+46.11%1Y change
Intel TM

+7.66%1Y change

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The new rise of Bitcoin

Over the past year, Bitcoin has doubled in price, confirming the title of the Father of Cryptо. An important pivot point happened in October, with BTC futures ETF adoption. Technically, it took the coin from the shadows into the legal fold. Citi Bank officials think that Bitcoin is now “at the tipping point of mainstream acceptance” and could one day “become the currency of choice for international trade.” This is backed by large companies like Tesla and PayPal accepting payments in BTC. The recognition of BTC as legal tender in El Salvador, and central banks considering issuing their own digital currencies also contribute to the matter. So, we might continue seeing increasing adoption of cryptocurrencies among investors, institutions, and even governments next year.

Switch to the Metaverse

In October 2021, Facebook changed its name to Meta — and this wasn’t just a marketing ploy. The company now wants to be associated exclusively with its new product — the metaverse, where users can communicate in virtual reality.

Meta developers promise to deliver a ‘new Internet’, where people will be able to travel digital worlds: from games to virtual offices and shopping malls. Tech giants like Microsoft and Nvidia are also looking to claim a stake in the ‘Verse’, which could be the future of work, entertainment and commerce. Mark Zuckerberg hopes that his metaverse will have 1 billion people by 2030.

While the project development is at an early stage, everyone understands that Meta is one of the most high-profile and ambitious projects of recent decades and a big pivot point in the history of the Internet.

What’s up for 2022?

Intense and rich in economic events, 2021 was all about stimulating spending and recovering damaged industries. 2022 could be about cooling and accelerating global economic recovery. 

The world will surely go on battling against COVID-19, but the overall outlook looks optimistic. State Street Global Advisors believe that the economy will keep recovering and delivering decent global growth. The markets will be slowly bouncing back to the pre-pandemic levels, and JP Morgan Chase even believes that 2022 will bring a full global recovery. However, once the markets reach the peak momentum and accommodation, the further recovery will likely be uneven and multi-layered. One of the reasons for that is the possible emergence of new Covid variants, which, as we witnessed in 2021, can undermine the hard-earned progress in a blink. 

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