Last year we took a guess at some of the big investing themes to watch in 2021 aaand… we’re pretty chuffed we weren’t far off. We called it: the big story of 2021 was the injection of hope provided by the vaccine roll-out, and we took to cheering on the number of new injections doled out each day.

The arrival of Joe Biden’s US presidency brought a much needed sense of stability to many, though not his proposed higher tax rates for corporations. Stable political leadership was one less headache for CEOs (less so possible tax hikes), leaving them time to focus on battling the pandemic and the brewing inflation situation. Called that too. Ding ding. And while big tech didn’t exactly get downsized, there were definitely chinks in the amour as UK regulators forced Facebook owner Meta to sell Giphy on competition concerns. Don’t mess with the GIFs! And through all that, the big S&P 500 index marched on, rising almost 27% over the year.

But that was last year, and we’ve put a lid on that. With the impact of the pandemic and all its variants still lingering, what should investors watch for as we sail into the potentially choppy waters of 2022?

Could we expect more market volatility from inflation and interest rates?

It’s not just our summer road trips costing more this year. In the US, inflation had raced up to 6.8% near the end of 2021, its highest level in 39 years. That’s more than three times the Federal Reserve’s 2% target and a big challenge for businesses heading into 2022. Meanwhile Down Under here in Aotearoa, inflation rose to 4.9% by September last year, the highest it’s been since mid-2011, and higher than the expert predictions of 4.1%.

Inflation is the increase in prices for goods and services - think groceries and petrol - and it’s been rising as businesses battle supply chain chaos and labour shortages to meet high demand from cashed up consumers. When prices rise faster than wages, it can create big problems for economies, so governments and public sector officials in charge of keeping economies stable aren’t taking the situation lightly. 

To cool things down, the Fed has announced that they’ll stop injecting cash into the US economy by early 2022 before testing increased interest rates, much like New Zealand’s Reserve Bank has done here. This is big stuff! The impact of interest rates can stretch like tentacles across economies affecting how much cash consumers have to spend as well as impacting the price investors are willing to pay for investments like shares and real estate. The prospect of rising interest rates could come with the extra shudders of a roller coaster ride in the share markets.

Is an EV sales boom on the horizon? ⚡

So long emissions! 2022 could shape up to be the most electric year yet for sales of electric vehicles (EVs). The introduction of legislation to phase out sales of gas-powered vehicles in gas-guzzling populous states like New York and California will likely help drive demand and maybe even supercharge Joe Biden’s electric dream of having 50% of America’s vehicle sales electric by 2030.

Also pencilled for 2022, watch for a potential surge in new EV sales as trucks finally roll into the electric avenue. Ford expects to begin shipping their F150 Lightning in 2022 and Rivian also expects to start deliveries of their RT1 truck. Not one to be left in the dust, Tesla plans to double their number of factories, opening a new Gigafactory Texas in early 2022 as well as beginning production at its freshly minted Berlin factory. The gateway is also open for an increase in buying our cars online in 2022, while the enthusiasm for EVs could even spark a few new share market listings.

Is the robot delivery revolution ramping up?

2022 could spell a new dawn for robots living among us. In 2021, the pandemic set off the huge problem of labour shortages in the US as workers were forced into isolation due to positive Covid results, or chose to simply ditch the workforce for greener pastures as part of the ‘The Great Resignation’. In parallel, the pandemic also sparked a surge in demand for short-distance, or last mile, deliveries as we stayed home in our trackies and ordered-in from supermarkets, grocery stores and even fancy restaurants.

Autonomous delivery robots help to solve both problems. ARK Invest estimates robots can deliver goods 20x cheaper than human delivery, and trials are already underway to bring delivery droids to our streets. Amazon, for example, has their Scout delivery vehicle, and unlisted startups like Nuro, which is partnering with big names including Walmart, Dominos and FedEx, and Coco, which has partnered with Segway are looking to produce an army of delivery robots in 2022.

Could gaming become the gateway to the metaverse?

Avatar 2 might not be our only other-worldly avatar experience in 2022. Spending so much time isolating alone has accelerated demand for digital spaces that bring us together in huge numbers, and offer their own currencies and economies. Yep, we're talking about the ‘metaverse’. Games like Minecraft and Roblox have been leading the way, but as Hemingway once wrote, change happens “gradually, then suddenly”. In 2022 watch for more companies jumping in to test their ‘metaverse’ mettle - from retailers and advertisers to tech companies like Unity and Meta. Meta has already poured US$10 billion into its Reality Labs business tasked with creating its version of the metaverse, but they’re only one of many companies aiming to build virtual worlds. Expect to see video games increasingly morph into gateways for their own metaverse with their large user bases and more brands jumping in to get in front of users.

Will markets rock or roll in 2022?

As our lives slowly start to resume and economies open up again, some experts are predicting a positive year for the US economy but they caution that it could be a bumpy ride for investors. In the US, where consumers are still happily spending money, the Fed is forecasting GDP growth of 4% in 2022. But the unpredictability of emerging Covid variants, inflation challenges and rising interest rates mean we should expect some ups and downs along the way. Undoubtedly though, the biggest investing stories of 2022 will be the unknowns that take us by surprise, so stay prepared and remember that investing is for the long term.