The year 2021 as I call it “The year of breaching peaks” is obviously one of the most interesting years in the global markets and in specific the US market.
U.S indices kept on soaring week after week and month after month following the global recovery from the pandemic, whereby the average return on all the major U.S indices for 2021 reads approximately 22%.
However, when we compare this movement with the best performers for 2021 we notice that some stocks outperformed the major indices’ returns by even more than five times.
The top five performers (Figure 1) in stocks are as follows:
- GameStop Corp
- Upstart Holdings
- Moderna Inc
- Devon Energy Corp
- Continental Resources Inc
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Figure 1 (Source: Tradingview, 2021 outlook for top performers)
The majority of the best performers are related to the Financial, Energy, and Healthcare sectors. However, the influence behind this performance is neither financial nor technical.
It is basically the appetite of the investors, that is shifting from the traditional methods to newly adapted methods. Investors are now more influenced by announcements and social news, we can basically call this method social trading whereby market participants are following news trends. This shows that they are having more control over the market and over the system.
Let’s take a look at (Figure 2) some of the top performers in the cryptocurrencies market. This will prove our previous point, which is basically the shift in the mindset of the investor.
The best performer in the crypto market is the Axie infinity coin with approximately 12,338% return the past year. If we go back in time 2 to 3 years ago and tell an investment banker about an instrument with such a return, he would most probably laugh and ignore it.
The top five crypto performers (Figure 2) in are as follows:
- Axie
- Solana
- Fantom
- Polygon
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Figure 2 (Source: Tradinview, Top performers in cryptocurrency market 2021)
This shows that year 2021 might be a stepping stone towards a new mindset of investments given the fast returns that are being recorded on a daily basis whether from the stocks market or the cryptocurrencies markets.
Psychology and behavioral investments are the strongest approaches to determining trends recently, dominating over technical and traditional fundamental analysis.
The question lies here, will we see similar behavior in 2022?
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The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients