I’m joining in on the predictions fun, and offering some of my predictions for 2022.
I find predictions are most interesting if they have some objective measure associated with them to avoid the “this kind of happened” moment when looking back. I tried to provide predictions with some type of observable, measurable outcome for each.
The Copy-Paste Crowd Gets a Win
NFTs will experience their bust phase in the cycle. We’ll see some major price corrections in the NFT space as people pull back on speculation. To put a metric on this, I think we’ll see Bored Ape pricing floors drop below $100k, from its current $228k. This prediction isn’t a long term view on the potential of NFTs, but a prediction that this phenomenon will undergo the same boom-bust cycle that every new innovation goes through. Unfortunately for many, this will be a painful financial experience.
The New White Collar Economy
The shift to hybrid and remote work will accelerate, despite the pandemic largely moving into its likely permanent state of “always around but somewhat manageable”. Companies that can will have smaller office footprints, and make in-office optional for most employees. The migration from high-tax large cities to lower tax mid-sized cities and states will continue, with net migrations out of places like New York and San Francisco and into suburbs and mid-sized cities like Austin, Charlotte, Portland and others where people can get a bit more space for WFH offices, etc. This change will continue over the next decade, but by the end of 2022 we’ll see more reports of net migrations out of traditional work centers and into smaller ones.
I want to be clear that I am not short on demand for places like New York City. It has some rewiring to do in terms of its real estate composition – it probably needs more residential and less commercial space, but I am extremely bullish on NYC over the long term. I do, however, think the state will continue to lose more residents as people shift priorities away from needing to be close to an office. In short, the rewiring of the economy continues.
AI and automation adoption will accelerate. The rising cost of labor is changing the P&Ls of companies in many labor intensive industries (retail, manufacturing, etc). This shift will impact how these companies make decisions around automation and AI investment. Every company will start to look for ways to do more with fewer humans.
I don’t have a great objective metric, so I’ll say that we will double our number of enterprise customers deploying some level of NLP-based automation at Quiq, and you’ll have to trust me when I report back.
More Air Out of the Tech Stock Sector
The 2022 market correction will be concentrated on high growth tech, and largely not affect other sectors as deeply. It’s possible that this isn’t a prediction since it’s already started, but we’ll continue to see valuations of technology stocks come back down to be closer to historical revenue multiple levels. This is primarily going to be driven by interest rate hikes, which will change equity analysts DCF models. That will influence narrative, which will compound the correction. To put this to a metric, I think the broad S&P (VOO) will outperform technology ETFs (VGT) in 2022.
For(d) The Win
The Ford 150 Electric is going to be a massive hit, and will be a watershed moment for creating mainstream consumer demand for EVs where Tesla hasn’t been able to reach – the great American Red State truck owner.
The 2022 Lightning model sells out by March.
Related to this, I believe that demand for EVs will outstrip supply in the short term, as consumer preference moves faster than factories can retool. Electric is the new luxury, because it’s an easy (and flashy) way for a consumer to show their climate change credibility.
NIMBYs Heat Housing Prices
The housing market will continue to heat up. The incoming interest rate hikes will do little to alleviate the core problem of housing in the United States, which is that there isn’t enough supply in places where people want to live. We will continue to see housing values run up another 10% on average in the US in 2022, which is far above historical norms.
Congress Grinds Down
The Federal government passes no major piece of legislation in 2022. Build Back Better goes on the shelf as inflation continues its rise and the election cycle comes up. The democrats do not use budget reconciliation to pass it, fearing a centrist and independent backlash in the upcoming elections.
Despite this restraint, the Democrats lose control of the House and the Senate in 2022. This will happen even as the Biden administration accomplished some pretty remarkable things in his first year (COVID relief, infrastructure, presidential normalcy). Putting Obama aside, the left has an uncanny ability to steal defeat from the jaws of victory, and the upcoming mid-term election will be no different.
Rules of the Crypto Road
The SEC firms up securities policy guidance for blockchain technologies, better defining what crypto assets are securities.
Russian Gas Fees
Russia does not invade Ukraine, and they get their gas line to Germany deal done. There will be much much posturing, but the US, EU and Russia figure out a path forward without an escalated military conflict. There is too much shared interest in compromise.
That’s what I’ve got, what do you think will happen next year?