Experienced investors often use short and medium term volatility to buy themes they believe will last for years to come and approach the market from a longer term perspective. It’s hard to pinpoint this trend, but setting the tone can give you a clear picture of what’s going on and can be a huge benefit.
As we enter the second quarter of 2022, let’s focus on the five most popular investment trends today. Let’s take a look at some of the themes that show great growth potential.
1. Inflation protection
According to Labor Department data, inflation is near its highest level since 1981, so Americans are paying more for their daily needs. With the cost of living rising, investors seek inflation hedges such as gold to avoid rising prices.
Gold has historically been a safe haven asset for investors because its price tends to rise with inflation. In addition, during periods of political instability and volatility, gold bullion has a low correlation with the stock market and thus serves as a diversified investment in a portfolio.
For example, during the 2008 financial crisis, gold prices rose 2%, while the S&P 500 index fell 37%.
There are many ways to gain exposure to gold, from buying the metal directly to more indirect ways, such as buying stock in a publicly traded mining company. However, the most efficient approach for most private investors is likely to be investing in exchange-traded funds (ETFs).
Popular gold funds such as the SPDR Gold Trust (GLD) support physical gold investments and their performance is linked to gold prices. Others such as the VanEck Vectors Gold Miners ETF (GDX) track a basket of publicly traded mining companies. You can choose to make a similar investment in silver.
In addition to gold and other precious metals, investors should consider assets such as the Ministry of Finance’s Inflation Protection Securities (TIPS) and other savings bonds such as Bond I, which currently has a yield of 7% in the north. protected from inflation.
2. ESG Investment
The turmoil and uncertainty caused by the global epidemic has generated renewed interest from investors, consumers and employees to help companies prioritize environmental, social and governance (ESG) goals. These companies agree to focus on creating long-term value rather than short-term profits, not just profits.
And those options seem to be paying off. According to Morningstar, global demand for sustainable investment will reach $2.7 trillion by 2021.
By creating social value through sustainable practices, the company’s stock is more resilient than its peers.
For example, a Bank of America study showed that stocks in companies with strong ESG practices were less volatile, had higher three-year returns, and were more likely to declare bankruptcy.
One way to invest in socially friendly companies is to use an ETF such as the iShares MSCI USA ESG Select ETF (SUSA), which tracks an index of highly rated ESG companies. The names on the list include American Express (AXP), Accenture (ACN), Disney (DIS), Home Depot (HD), Hasbro (HAS), and more. Other options include the iShares Global Clean Energy ETF (ICLN) or the SPDR S&P 500 ESG ETF (EFIV).
This organization is led with the hope of being able to set the pace for a better future. By focusing on noble goals such as reducing carbon emissions, reducing waste, raising social issues, promoting equality, equity and inclusion, the company is redefining its role in society.
3. Artificial intelligence
The technological revolution has brought artificial intelligence (AI) to the forefront of society, creating a reality previously imagined. As AI disrupts many aspects of our lives, new technology has the potential to become the most influential industry of the century.
In essence, AI seeks to imitate human intelligence on a computer or machine more quickly and accurately. Therefore, as systems become smarter, AI will become more powerful, and usage and applications will impact almost every industry.
Analysts at International Data Corporation (IDC), a market intelligence provider, predict that by 2024, the global AI market will generate over $500 billion in revenue and a five-year compound annual growth rate of 17.5%.
AI is everywhere. Apple (AAPL) uses facial recognition software to unlock iPhones, companies like Samsung (SSNLF) make smart appliances like refrigerators and washing machines, or uses automated algorithms. Whether you use RoboAdvisor to optimize your investment, it’s a versatile technology.
For most private investors, they have probably experienced AI. This is a large number of US listed companies that use technology or want to invest aggressively. But for those who want to publish immediately, some important names include Intuitive Surgical (ISRG), Upstart Holdings (UPST), Intel (INTC), Trimble (TRMB), Brooks Automation (BRKS).
The future of the Internet includes a virtual world where humans can interact seamlessly in physical space. Analysts predict that this virtual environment could be the next big investment opportunity.
Thanks to better computing power, faster internet connectivity and other technological advances, green technology companies, enable people to shop, play, exercise, study and experience the common activities of life digitally. I’m developing a system. For example, Facebook plans to change its name to “Meta” (FB) and invest billions of dollars in its ambition to build the Metaverse.
As the target audience for these virtual environments grows, so does the interest in companies trying to use this style. For example, Sotheby’s Art Gallery (BID) announced last year that it had reached $100 million in non-fungible token (NFT) sales and had started operating Sotheby’s Metaverse, a new virtual gallery for the 3D virtual world Decentraland.below. Additionally, Nike recently announced the expansion of its digital footprint through the acquisition of virtual sneakers company RTFKT.
Additionally, Microsoft (MSFT) has set up its $68.7 billion acquisition of Activision Blizzard for the most important gaming transaction in history. This is a big bet to expand the Metaverse.
Among other investment opportunities, some analysts point to NVIDIA (NVDA), the semiconductor company that dominates computer graphics, as a potential winner for Metaverse growth. In addition, Autodesk (ADSK) and Unity Software (U), makers of software that enable architects and designers to create 3D models, Fastly Cloud Technology Provider (FSLY) are also top names in their field.
For those seeking more exposure, the Roundhill Ball Metaverse ETF (META) provides an efficient and easy way to invest in Metaverse specialty stocks.
5. Invest in music
From concerts in virtual reality to access to songs at any time, the music industry is entering a new golden age with technology confusing how listeners use music. Listeners listening Goldman Sachs estimates music revenue could reach $131 billion by 2030, supported by a surge in worldwide music streaming.
The combination of wide bandwidth access and rapid innovation has allowed brands like Apple, Spotify (SPOT) and YouTube (GOOG) to redefine their music experience.
For musicians, streaming platforms contain a wealth of information about audience habits, guide new artists in deciding where to tour, create new songs for producers, and gather audience demographics, and raise funds for new projects. Spotify alone hosts more than 380 million listeners in 184 markets. This effort creates an additional source of income for loyal music owners such as Warner Music (WMG).
Then there are live events companies like Live Nation Entertainment (LYV) which have Ticketmaster. Others such as Madison Square Garden Sports (MSGS) and Eventbrite (EB) could also benefit from increased attendance at private events.
Apart from investing in public companies, some investors also buy and sell music royalties at auction to crowdfunding companies such as SongVest and Royalty Exchange. Fintech companies estimate the value of a music catalog, determine the number of units available, and create a list through open recruitment. Investors then receive quarterly or bi-annual payments for investments equivalent to stock dividends.
For people in the industry, souvenirs and even instruments like vintage guitars and pianos become collectibles over time, sometimes costing tens of thousands of dollars (or more).
In short, some investors believe that the music industry could be the next blockbuster in the portfolio in the years to come.