On January 5, 2021, I identified three megatrends that I believed would offer great investment opportunities in 2021.
Quelle: Dmitry Demidovich / Shutterstock.com
Now that the year draws to a close, let’s go back and review these influential trends.
You can read the full article, which was published in January, here, but for now, here’s a condensed version of the three megatrends I spearheaded in 2021 – and how they played out this year.
2021 Trend No. 1 – The battery-metal boom
Thoughts at the beginning of the year: The first big trend that could lead to investment winners in 2021 is what I call the “Second Electric Revolution” – the massive global transition from combustion-based forms of power generation to renewable energy sources that feed a range of electric and battery-powered technologies.
Because of this revolution, spectacular amounts of nickel, copper, manganese, lithium and other battery metals will be required in the coming decades.
Unlike traditional internal combustion engine vehicles, electric vehicles are essentially batteries on wheels … and batteries are basically just lumps of metal.
The average plug-in electric vehicle uses around 200 pounds of copper, which is almost four times the needs of a medium-sized internal combustion engine. Depending on the exact battery chemistry, these vehicles also contain around 50 pounds of nickel as well as meaningful amounts of manganese, aluminum, and / or lithium.
Day by day these “metal pigs” are gaining popularity and taking market share away from vehicles with internal combustion engines.
In 2018, the global electric vehicle market was approximately $ 40 billion. But, according to Wintergreen Research, that number will quadruple by 2025 and reach $ 1.5 trillion in annual sales – and those impressive projections seem to be growing by the day.
But the electric vehicle industry is not the only new source of demand for battery metals. Most of the world’s major economies are accelerating their clean energy plans, and are doing so with increasingly metal-intensive technologies like energy storage.
Clean energy has become a huge business worldwide – one measured in trillions of dollars. Because of this, select mining stocks could shine brightly in 2021.
A prominent example is Freeport McMoRan (NYSE:FCX). Although the stock has doubled this year [i.e., in 2020], I expect it will continue to go up in 2021. But Freeport won’t be alone. Many other “battery metal” games could dazzle investors over the next 12 months.
TO UPDATE: This megatrend has played out exactly as expected.
The battery metals sector has shot forward year-round, propelling Freeport stock up to 70% gains. Many of the other battery metal games I’ve recommended in my investment services – like ERAMET SA (OTCMKTS:ERMAY) and (OTCMKTS:CONXF) – made even greater profits.
This sector has taken a breather over the past few months, but I expect it will continue to move forward in 2022.
2021 Trend No. 2 – The global 5G rollout
Thoughts at the beginning of the year: The burgeoning global 5G deployment should deliver some great success stories in 2021 as well.
That’s because 5G isn’t just what comes after 4G. It is a uniquely powerful investment that will generate tremendous returns over many years.
The incipient 5G boom is a powerful megatrend that will offer a multitude of investment opportunities – from building actual 5G infrastructure around the world to the wide range of technologies and business applications that 5G infrastructure will enable and charge .
Trillions of investment dollars will flow into and through 5G infrastructure over the next few years, no matter how good or bad the global economy is doing.
Simply put, 5G is the latest in the groundbreaking innovations that will accelerate technological advancement.
No company and no country can afford to ignore 5G or to lag behind in construction and use. This new network is quickly becoming the essential oxygen of the coming technology-based economy … and the dollars involved will be astronomical.
TO UPDATE: Like the battery-metal boom, the 5G megatrend also brought abundant investment gains over the course of the year.
But I believe that such growth is only the “first fruits” of what this trend could bring in the next few years. The 5G megatrend is still in its infancy and I expect it will bring big gains in 2022 and beyond.
2021 Trend No. 3 – “Easy Money” makes hard money shine
Thoughts at the beginning of the year: The third and final big trend that could pay off in 2021 is what we call “easy money”.
Not to be confused with Eddie Money, the rock ‘n’ roll star of the late 1970s, easy money is a collective term used to describe a state of abundant – or “excess” – liquidity in the financial system.
The term refers to the outcome of fiscal and monetary policies that together cause “excess liquidity” to flow through the US financial system.
Easy money conditions often lead to soaring inflation, which usually leads to a big, big rally in gold and other commodities. Because of this, the gold market may offer one of the most promising trades of 2021.
Although gold has been dormant for the past few months, it could wake up again soon … thanks in part to what I’m showing in the graph below.
the US-Dollar-Index (DXY) has just hit a new two-year low and its price trend is unmistakable: it is moving down.
A weaker dollar is a typical result of easy money conditions … and usually good news for gold.
At least that’s what history tells us.
If the dollar’s downtrend gains momentum, the price of gold should continue to move higher – and maybe much higher.
TO UPDATE: Okay, so two out of three are not bad!
While this megatrend was flourishing as expected, gold stocks weren’t. The Federal Reserve’s monetary policy, combined with one of the most spectacular fiscal stimulus campaigns of all time – think “economic controls” – resulted in the highest inflation levels in three decades. And yet the gold market only yawned.
Despite the Fed’s recent pledge to fight inflation by hike rates three times next year and three times in 2023, I expect inflation will continue to rise for a while. But if the yellow metal doesn’t respond to the highest levels of inflation in 30 years, will it respond to even higher levels?
Hard to say. Right now, gold may be a better asset to wear around your neck than it is in your portfolio. I’m not counting it all out in 2022, just not confident about its potential.
Whatever awaits us, 2022 should be an exciting and, yes, profitable year!
PS Louis Navellier, Luke Lango, and I just came up with a simple strategy that could do it Beat the markets by at least four times or more next year. It’s a simple approach that could show you the top performing, resilient stocks of 2022 BEFORE the new year comes. Details here.
At the time of this writing, Eric Fry held positions (neither directly nor indirectly) in any of the securities discussed in this article.
Eric Fry is a award-winning stock picker with numerous “10-bagger” calls – in both good AND bad markets. As? By finding strong global megatrends … before they take off. In fact, Eric has recommended 41 different stock market winners greater than 1,000% throughout his career. He also beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a competition. And today he unveils his next potential 1,000% winner free, right here.
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