New investment trends rip through the markets every year, and it’s often hard to predict ahead of time where money will flow. While it’s generally best for long-term investors to stick to consistent, regular investing, it can be fun and profitable to jump into high-momentum sectors of the market if you’re nimble and can handle the risk. In 2021, a number of strong investment themes emerged at different times throughout the year. Here’s a look at some of the market-moving themes that generated headlines in 2021 and may or may not continue into 2022.
eme stocks were one of the biggest boom-and-bust segments of the market throughout 2021. Meme stocks are in large part a product of the rise of social media and online message boards. Investors can now communicate investment themes and strategies instantaneously across the entire world. In 2021, groups of online investors focused their attention on stocks with large short positions. By piling into these stocks and driving the share prices higher, these groups of investors can trigger a short squeeze, driving the share price up even higher. This can create extraordinary stock price movements, as epitomized by stocks like AMC Entertainment and GameStop in 2021. As of Dec. 3, 2021, those stocks are up 1,268% and 815%, respectively. GameStop was up an incredible 400% in a single week in January 2021.
If there was a competitor with meme stocks for headline space in 2021, it was cryptocurrency. As the first, largest and most well-known crypto, Bitcoin garnered a lot of the attention in 2021, especially as it shot up from below $30,000 in the summer to nearly $69,000 in November. But that was small peanuts compared to some of the runs in other cryptos. Shiba Inu, for example, was up an unfathomable 49.15 million percent year-to-date as of Dec. 4, 2021. And that’s after a significant correction of over 50% from its high set just in October. With major news events like the IPO of the largest cryptocurrency trading platform, Coinbase, to the acceptance of Bitcoin as legal tender by El Salvador, cryptocurrency seems to be only gaining momentum.
