Market Health

2021 Recap: Revisiting Our Annual Forecasts

Before a new season of a show starts, there’s always a recap. It reminds viewers about what transpired last season and may hint at what will happen next. So this is your 2021 recap. Let’s see which annual forecasts came true… and perhaps they will provide a clue as to what to watch for in 2022.

Matthew Carr

  1. Cannabis Grows Like a Weed: “In 2021, I think we will see the inklings of major changes at the federal level… And I think as many as five more states will legalize cannabis markets this year! I’m watching Connecticut, New Mexico, New York, Pennsylvania, Rhode Island and Virginia.”

    As Matthew has touched on previously, 2021 did not bring us the great cannabis reform that we were expecting. And longtime readers know that it has been a bumpy road. The U.S. House of Representatives did pass the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act as well as the Secure and Fair Enforcement (SAFE) Banking Act this year… again. But there’s no real chance of either bill passing in the Senate. Connecticut, New Mexico, New York and Virginia all debuted their adult-use markets in 2021, as predicted. Both Pennsylvania and Rhode Island are surrounded by other recreational markets and have legalization efforts in progress.
  2. Travel and Leisure Stocks Recover: “2020 was a devastating year for airline, cruise ship, restaurant, movie theater, theme park and travel stocks… There is pent-up consumer demand for travel… and being anywhere besides home.”

    Travel and leisure stocks did recover in 2021… only for the delta variant to scare all the gains away. Now the sector is once again on the up and up, even with the uncertainty surrounding the omicron variant. Travel stocks did take a hit in November, but it was nothing like we saw in March 2020 or even August 2021. We’re taking the long road there, but the sector is moving in the right direction.

  3. The Energy Bull Is Back… for Now: “In 2021, expect U.S. crude to retake $60 per barrel – a level not seen since the early days of 2020… This sector was the worst performer in 2020 by a considerable margin. Time to go discount shopping!”

    Not only did the price of crude retake $60 per barrel, but it’s currently soaring at more than $70. Even with the rising popularity of electric vehicles and renewables, we haven’t seen the backside of oil.

  4. The Stock Market Rally Continues: “It’s a new year, and there’s a new leader at the helm of the U.S. The first year in the modern U.S. presidential cycle that I created is one of the best years for stocks… I think we’ll see another year of gains for U.S. stocks, with small caps leading the charge.”

    As it stands, the broader indexes are at all-time highs and living up to Matthew’s presidential cycle prediction. The Russell 2000 was indeed leading the pack for the first half of the year. But it has since fallen in line with the Nasdaq. The tech-heavy index has seen the biggest recovery. It was lagging the other indexes by a wide margin in the first half of the year but is now trailing the S&P 500 only slightly.

  5. Bitcoin Tops $30,000: “The reward halving that happens every four years triggers a multiyear bull market… I think $30,000 is a feasible target, with potentially a lot more in store.”

    You could say that again… When Matthew wrote this forecast at the end of 2020, Bitcoin was trading at just $20,000. Less than a year later, it hit an all-time high of more than $68,000! It is currently trading at almost $50,000. Bitcoin has its own four-year cycle based on its reward halving schedule. So expect to see a lot of volatility here, similar to what we saw in 2018.

David Fessler

  1. Economic Uptick: “Starting in the second quarter, I expect to see markets anticipate the beginning of America’s reopening and its subsequent economic improvement. By the end of the second quarter, every American who wants to be vaccinated should have had that opportunity.”

    As I previously covered, the market is at all-time highs. Vaccines are widely available, as Dave predicted, and most sectors are operating at near-normal capacity.

  2. New Technology: “2021 will see plenty of new technologies gain further traction. Some areas I’m watching are business automation and robotics, artificial intelligence, new computer architectures, next-generation communications, and advances in cybersecurity. Businesses will use these technologies to increase efficiency and resilience. They will be integral to expanding operations in a cost-effective manner.”

    Grocery stores, warehouses and other large buildings are increasingly using automated floor scrubbers, inventory takers and product retrieval systems. These are a combination of robotics and artificial intelligence. They’re all designed to make businesses more efficient. With companies having a hard time hiring, these technologies should rapidly expand over the next several years.

  3. Green Hydrogen: “It’s become clear that green hydrogen is one of the elements key to a carbon-free future. This is one of the fastest-growing areas in the energy sector. When green hydrogen is burned, it produces energy, heat and water vapor. There are no pollutants. It will be crucial to decarbonizing sectors of the economy that are difficult to electrify. Long-haul trucking, heavy manufacturing and aviation could all use green hydrogen to operate.”

    Green hydrogen deployments continue to expand at a rapid pace. Electrolyzers and fuel cells are increasingly replacing lead-acid batteries in forklifts and inventory retrieval applications. Around midyear, car manufacturer Renault introduced a hydrogen fuel cell EV for last-mile deliveries.

  4. Energy Storage: “Energy storage was installed at record rates in 2020, and utilities are making large-scale investments in this sector. Paired with solar and wind resources, energy storage gives these electricity-generating sources baseload capability, eliminating the need for fossil fuel-based generating sources. I think we could see a fivefold or sixfold increase in the energy storage business by 2025. It’s a multibillion-dollar opportunity for investors.”

    Energy storage is now accepted as a mainstream power technology. It’s expected to double in size this year to 56 gigawatt-hours. And that number is expected to increase seventeenfold by 2030.

  5. 5G and Satellite Internet: “Faster internet for all will be the norm in 2021. It’s all about enhancing our connectivity to the rest of the world and each other. Whether it’s from a 5G fixed wireless access device or a Starlink satellite account, faster connections with lower latency open new doors in terms of what’s possible. And 5G brings the threat of obsolescence to fiber- and cable-based networks.”

    The global 5G infrastructure market is expected to grow from $12.9 billion this year to $115.4 billion in 2026. That’s a compound annual growth rate (CAGR) of 55%. Satellite internet is also growing like wildfire. It’s projected to reach a market size of $18.6 billion by 2030, growing at a CAGR of 20.4% from this year.

That was 2021 in a nutshell. Stay tuned for when Matthew and Dave reveal their 2022 predictions in the coming weeks. They’ll cover market expectations, projected technological advancements and high-growth areas to watch.

Good investing,

Rebecca

P.S. Were you able to profit this year off any of the trends listed above? Let us know in the comments.

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