Let us imagine we know what happens in the stock market next week and which shares will grow. What do we do? Right you are, we will by those shares. As a result, there price will, indeed, grow at some point. However, will it keep growing if all those who were interested have bought the shares? The answer is — no. If there is no demand, the share price never grows.

Uncertainty is something that the stock market needs. Some investors think that the shares will grow, some say that they will fall. They find each other in the market and balance out demand and supply. When there are more investors who want to buy than those who want to sell the share, the price starts growing, and vice versa. No one can be sure about what happens tomorrow.

With forecasts for 2022, it is the same. We cannot be certain about what happens next year but we can try to predict the situation based on the data we have.

By the way, at the end of the year we can notice how large banks, including Saxo Bank, the Goldman Sachs Group, Inc. (NYSE: GS), etc., make predictions for 2022, attracting attention of market players to certain financial instruments.

Time will show whether they manage to do it or not. They might be having their own goals. As for us, nothing prevents us from making our own forecast for 2022 as long as we have all necessary information available.

Inflation and banking sector

The first thing you should pay attention to in 2022 is inflation. It disturbs everyone because it influences the price of goods that we purchase. To conquer inflation, we need to decrease the demand for goods or take a part of money away from the system.

How do we decrease demand for goods? We make money more expensive, i.e. we increase the interest rate. This will make loans more expensive and make people spend more money than earlier on paying off old debts. As a result, some part of the free money flow will be spent on paying off loans instead of buying goods, while the demand for new loans will drop.

The second and less radical solution is to decrease the speed of the printing machine. This measure will influence enterprises first-hand. The government will decrease the demand for the bonds of companies, the interest on them will grow, and the issuers will have to loan money at a higher rate. Also, to find money for paying off the interest and the main debt, companies will either have to decrease spending or increase income.

The simplest way is decreasing spending but this might affect the salary of employees that will stop growing. In the end, the demand will again drop because the amount of money in the system will be growing too slowly.

Which way will the US Federal Reserve System go? Judging by Jerome Powell's speeches, in 2022 he plans a noticeable slow-down in the work of the printing machine. However, many experts say that this will not be enough to fight back such high inflation, so the Fed will have to increase the interest rate.

An increase in the interest rate will be a blessing for the banking sector. It could affect several largest banks, which are:

Energy sector investing

In 2022, the energy sector will also provide interesting investment opportunities. The pandemic and focus on green energy entailed an energy crisis, which made hydrocarbons prices grow.

Gas and oil companies are in the forefront. Currently, several countries are now opposing OPEC. They start selling strategic oil reserves to drop oil prices because high oil prices harm their economies. However, other countries worry about their budgets and fail to increase oil production, keeping oil prices high.

For now, anyway, OPEC members win: they do not hurry to increase production and gradually push oil prices upwards. Selling strategic reserves (which is the only possible reaction of other countries for now) is temporary, and no one can be certain that, once announced, these measures will actually follow.

Certain volumes of black gold might appear in the market, yet regular consumers need long-term contracts, not single trades. Hence, most probably, oil prices in 2022 will go on growing.

If so, the leaders of the gas and oil sector - Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX) have chances to grow as well.

Investments in biotech

Banking and oil sectors are for conservative investors: the annual return can hardy reach 100% there. The year-2021 has shown that you can have a return of 100% overnight. Will there be such a chance in 2022?

There will be, indeed. As always, the biotech sector will shake up investors with surges up and down. If you plan to catch such an instance, you will need to keep an eye on the calendar of the US Food and Drug Administration (www.benzinga.com/fda-biotech#historical). Normally, after a drug passes the next stage of tests, the shares of the company that produces it sky-rocket by hundreds of percent.

Metaverse

Another hot topic of 2022 might be the metaverse. Large tech companies are peeking at virtual reality, making this issue more and more popular.

Nowadays you can already come across such news as "A Land Plot in Metaverse Was Sold for Record $2.5 million". Then news about selling houses, cars, and other virtual property will follow. A piece of news like "Company X Carries Out World First Metaverse Meeting" can have an explosive effect. If Company X is public, its shares can demonstrate steep growth.

The laurels of Company X are likely to be taken by Mark Zuckerberg's Meta Platforms Inc (NASDAQ: FB), former Facebook Inc. So, Meta Platforms Inc is one of the options for investing in Metauniverse in 2022.

However, experts say that in the future, Apple Inc. (NASDAQ: AAPL) can easily push Meta Platforms away from the pedestal. So, Apple remains an interesting investment option as well, regardless of already being the world's largest company in terms of capitalization, with a record number of shares in circulation.

In the market, you can already hear cautious remarks that investments in the metaverse now a like investments in the early Internet 30 years ago. However, the metaverse requires huge processing powers, and such companies as NVIDIA Corporation (NASDAQ: NVDA) and Advanced Micro Devices, Inc. (NASDAQ: AMD) provide these services.

In fact, the metaverse has not appeared just now. The thing is that large companies finally noticed it, and large investors will follow. Hence, we expect a money flow into this industry.

Such companies as Unity Software Inc. (NYSE: U) and Roblox Corporation (NYSE: RBLX) has long been working with virtual reality. There are also several promising companies that have not had an IPO yet but are already well-known. These are The Sandbox, Decentraland, and Epic Games - the creator of the world-famous game Fortnite.

All in all, in 2022 keep an eye on the virtual reality as the market might be full of interesting issues around the metaverse.

Closing thoughts

2020: coronavirus; stock indices collapse but 4 months later renew all-time highs.

2021: inflation beats records, hydrocarbons prices grow; market players are afraid that regulators will lose control over the situation, a bubble will inflate and then send the shares into a collapse. However, S&P 500 grows by 29% during the year.

2022: some started mentioning stagflation. How much will S&P 500 grow, I wonder?

I think, next year in the stock market will be breathtaking. I wish you a share that you will remember for years as the best profit ever.

Disclaimer: this material and the information contained therein are for informational purposes only and should in no way be construed as providing investment advice for the purposes of the Investment Companies Act 87 (I) 2017 of the Republic of Cyprus, or any other form of personal advice or recommendation relating to certain types of transactions in certain types of financial instruments.

Past performance is not a reliable indicator of future results or future performance.


Material is prepared by

A trader since 2004, Eugene started actively investing on the US stock market in 2012. He now regularly publishes a variety of analytical articles about stocks on the RoboMarkets website and blog.