2022 Look Ahead
My sense is that 2022 will be a return to normalcy for a large swath of the population. I think this will be driven by two factors:
The SARS vaccine that will be released by Walter Reed hospital.
The midterms, and both parties preaching a “move forward” mentality.
My feeling was then greatly supported when I learned that President Obama stopped testing for H1N1 once it was determined to have symptoms similar to the seasonal flu.((I linked to the article I did on purpose, so you could see both sides of the story)) Now that we have several datasets saying that Omicron is, at a macro-level, nothing more than the flu or a cold((especially for those who are vaccinated)), my sense is the same thing will happen here.
I think the case, hospitalization, and death counts on TV screens will go away, the media will start talking about “learning to live with COVID,” and in a matter of weeks it will be as if COVID doesn’t exist.
For large swaths of people, they will return to work((in a hybrid/remote fashion)), their social lives will continue largely as they do now, and everything will feel “normal.” I think all this is a good thing.
Of those people who took great advantage of the pandemic and adjusted to a “new normal” for the last 24 months, there will be a separation into two groups:
Those who can adapt to the world not in crisis
Those who wish the world was still in crisis
Of those who can adapt to the world not in crisis, they will flourish.
Those who wish the world is still in crisis, I believe, will not be primarily shouting from the rooftops about more lockdowns or case counts,((Even if they do, I think it’ll fall on deaf ears)), they’ll be saying “it’s just not the same.”
Ultimately, it will be on everyone to build a life and a business that thrives in good times and in bad.
Finance
This year was easy money for almost all financial instruments. My sense is that next year will be much more difficult.
The combination of QE ending in March as well as rising interest rates will be worth watching, as my sense is that three things will happen:
Lots of money will be taken out of the system.
Growth stocks will get hammered.
Crypto will be one of the worst-performing asset classes in 2022.
Admittedly, I say this after liquidating over 80% of my cryptocurrency portfolio.
I think it’ll be a spiral. Talk of interest rates/end of QE will trigger talk of recession will trigger talk of “should I sell?” will trigger people actually selling and because other people have also been listening to all this chatter, they’ll sell too.
The fact of the matter is that inflation is not transitory. It will be solved, but it won’t be immediate. The labor market will continue to have far more job openings than applicants, and Boomers will continue to retire at staggering rates.
Cryptocurrency post-November 8 is already taking a beating. Bitcoin’s ATH of over $67,000 is currently around $47,000, and Ethereum’s ATH of over $4700 is now down near $3,800. I strongly believe this will get worse, all because of a similar spiral as above. The 2018 crypto-winter was pretty brutal, and while that space certainly has more credibility and traction now than it did then, I think there’s still huge amounts of speculation.
Heading into an environment like this, I wish I knew what trades to make, but I don’t. I intentionally do not focus on individual stocks (although I do speculate in cryptocurrency), and so I’ll be continuing to dollar-cost average my way into the market.
Entrepreneurism
I recently heard the term “Great Resignation” for the first time. My firm belief is that the shift to remote work over the last two years is and will compel a shift to freelance work, especially for 20-somethings.
I continually hear from my millennial and Gen-Z friends (and parents of children in those generations) that the drudgery of college and corporate life is demotivating and “not the vibe.” This trend will continue.
For freelancing, the only resume someone needs is their work history. It’s relatively easy to sign up for services like UpWork and Freelancer.com, along with more “vetted” sources like TopTal, develop a proof of success in your chosen skillset, and make a life for yourself through those platforms.
This is a positive-feedback loop.
Each freelancer will need support functions like project management, automation building, website development, graphic design, accounting and bookkeeping, marketing and advertising, copywriting, and tech support.
All those support functions will be filled on a project-by-project basis by… other freelancers.
Lastly, I am hearing of more and more startups solving the self-employed healthcare issue. For those of you thinking “but health insurance!” I don’t think it will be an issue in the next few years.
AI and Automation
We’re still in the bottom of the 1st or top of the 2nd inning with automation and AI. It’s so early. I’m not sure when the wave will crest and the market will move from early-adopter to mass-market, but my expectation is that it will not happen in 2022.
AI and automation are being talked about a lot, but there’s still too much confusion from a consumer-perspective. While I think the market will expand this year, I don’t think it will be an all-at-once expansion like crypto had in 2017 or mobile apps had in 2009-2010.
Ultimately, here’s how I expect the market movement to happen:
Boomers retire en masse while young people become freelancers at record rates.
Job postings aren’t filled for months at a time.
Top talent is reduced to doing low-level, repetitive work because the support openings can’t be filled.
Companies automate the support roles so they can retain their key people.
Aggregator brands will suffer
At the beginning of last year, my roommate bought a water purifier from Amazon. He bought it from the company’s specific Amazon page. When it came, we discovered it was fake. When we contacted customer service, they couldn’t help. Upon further research, there are tons of fake listings on Amazon that say they’re even the brand-name product.
Toward the middle of last year, I started noticing that Google search results for specific niches were getting really bad. Upon further research, other people are noticing it too.
Last year was Substack’s year to make itself known, and that it did. Widely-followed journalists left their roles at major firms and became independent. No longer under editorial oversight, they spoke their minds and made a great living doing it.
When Mark Zuckerberg changed the name of Facebook to Meta, he didn’t go on the talk shows to talk about it, he went on GaryVee’s podcast and on Ben Thompson’s Stratechery.
The world has spent the last 10 or 15 years building brands on top of the conglomerate aggregator companies. This year, I expect:
More consumers to buy key items (where they really care about brand-names) to buy direct, not on Amazon.((Amazon’s revenue will continue to grow and people will use it more, but for other stuff.)) On the flip-side, more and more large brands with easily counter-fitted items will pull listings off Amazon.
Startups will form to build niche search engines for overcrowded SEO markets like health.
The general public will begin to follow journalists and not outlets.
Companies and entrepreneurs will focus more communication to be direct to the end consumer.
My contrarian opinion
My contrarian opinion for 2022 is that hybrid work where employees go into the office 1-2 days per week, or even worse, 1-2 days per month, will not work. I think teams will decide to be 100% remote, with quarterly meetups in different cities.
Too much in-office disruption. Those employees will spend more time chatting, catching up, and hanging out than they will actually working. People will call this “important team building” to start, but it will lose its luster. Beyond that, some offices won’t even have permanent desks for those employees, so it’ll be like a giant coworking space.
Remote hiring. Companies will hire remotely (especially during the labor shortage we are and will continue to be in) yet require employees to come into the office a few days per week/month. How exactly will that work? It won’t. All-hands meetings that people think will be in-person will actually be over Zoom (with everyone in the office, but on a Zoom call, of course) because some percentage of team members will not be in the geolocation to come into the office. Hybrid Zoom/in-person meetings don’t work.