Quora Answer: What Should be Considered Making an Investment Decision on a Market in 2022?

The following is my answer to a Quora question: “What are the factors to be considered while making an investment decision on a stock market in 2022?” 

Any investment decision made this year has to account for two major considerations: the first is the rate of inflation due to supply chain challenges, and the second is the rising cost of energy due to sanctions and disruption of global oil and gas supplies.  Their effects are global and this has lead to a depression in equity values.  Bond yields have not risen appreciably due expectations that the rates would be raised to combat inflation.  And then Russia decided to invade Ukraine, and so there is uncertainty in the market. 

Any investment that has an extended investment horizon should minimise movement if they are invested in East Asia and Southeast Asia since these are still the growth regions of the world in the long term.  Europe is in a mess, with the ECB unable to coordinate any coherent policy in a timely manner to address immediate challenges.  Western Europe is dependent on cheap Russian gas and oil.  The sanctions they slapped are not helping them.  This is not a problem that will go away anytime soon, even if Russia stopped its invasion right now.  The United States is amidst a massive infrastructure rebuild, but the real opportunities in technology will eventually be stymied because the administration seems intent on another collision course with China. 

For the short term, the real money is to be found in funds that invest in energy and commodities such as ores.  There is a global supply chain bottleneck that has raised their price.  There is also a shortage of chips and transistors.  In these areas where demand outstrips supply, we are looking at record profits.