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These Trends Could Drive the Stock Market in 2022 and Beyond

As investors embark on a new year, they might be considering what trends could define the stock market. In this segment of Backstage Pass recorded on Dec. 22, Fool contributors Danny Vena and Rachel Warren discuss.

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Danny Vena: For me it's interesting because I've really been struck by the changing phase of investing over the course of the past year. The year started out with a trend that we saw really kick off in 2020, which was the rise of meme stock investing and the power of retail investors to gather together in online forms and really move markets, at least in the short-term. But then we've also seen the rise of cryptocurrencies.

They've been gaining traction and much of that has been driven by interest from small investors. Non-fungible tokens or NFTs have been becoming a big thing over the past year.

It's changing the face of not only collectibles, but also as investments. Then finally, we saw the IPO market, which had a banner year. It broke records for the number of IPOs, the number of SPACs, total deals, the amount of equity raised. It wasn't just in the United States, it was worldwide.

I think what has really spurred these developments, what they all seem to have in common is the rise of the retail investor. I think there has been an increase in the number of individual that were interested investing and that was a result of the pandemic related lockdowns. People who found extra time on their hands turn to the stock market as a place to invest and learn new things.

This has brought in many new, novice, and younger investors into investing that we had not seen in those sheer numbers before. I think what, as a result, these younger investors have brought with them, they're more openness to non-traditional investing strategies. That's why we're seeing so much interest in things like NFTs, and cryptocurrencies, and meme-stock investing.

I am still a little hesitant about whether or not that's going to be good over the long-term. I think we've seen a little bit of a decline in the fervor for meme-stock investing. I'm waiting to see whether or not overall some of these things are going to become part of the investing landscape or not. But I think it's really interesting to follow, and last year was certainly fascinating in that regard.

Rachel Warren: Yeah, makes me excited for 2022. I think it's interesting because I do think some of the volatility we've been seeing is very much because the way so many people invest has changed.

I think in addition, you do have a lot of first-time retail investors that are entering the market and are applying maybe "unconventional methods." But it is very interesting to see all these new types of investments that no one was really talking about a few years ago.

I mean, we were talking about crypto, but some of these other things like NFTs have really seem to have taken a front seat over the past year or so. I do find that really fascinating.

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