2022 Stock Market Summary

As we round the end of the first quarter of the new year, we are already seeing the warning play out from many Wall Street firms that the market’s rally is over. While the economy still looks good, returns will moderate. After the initial boom from countries returning to more normal levels of operation in light of the weakening effects of the pandemic, lingering effects in areas like the supply chain and other world economic issues are causing new challenges.

Bloomberg News compiles and presents the key investment themes and forecasts from dozens of financial firms in its annual report on the state of the stock market.

Inflation Concerns

Inflation is frequently cited from the board room to the bar-room this year. It’s often paired with terms like “rising” or “higher.” Rising prices are definitely a primary concern for the stock market and the rest of the financial world this year. Firms are somewhat divided on how the current inflation crisis will play out, but everyone agrees predictions are uncertain and monetary policy mistakes are more likely to occur this year.

The expectation is that policy will raise rates and that yields will rise, resulting in negative returns for fixed-income investors.

According to Goldman Sachs, part of the reason why valuations are elevated is that they’re more than the historical norm. When everything looks expensive, the expected return is less than 10%.

China and Pandemic After-Effects

Calls seem to agree, however, that pandemic threats are lessening. At the same time, the continued slowing of China’s economy has people concerned about significant risks. The word “China” was more than twice as often used. Bejing domestic policies have been unpredictable, and continued concerns about tensions surrounding Taiwan have everyone on edge. While China isn’t yet an uninvestable asset, several firms argued that it could still be a good investment.

Despite the media hype, digital assets were also not widely discussed. Cryptocurrency has a lot of potential, but it hasn’t yet been established as a reliable portfolio asset. ESG investing, however, seems to be a popular option. Specific strategies are hard to find, but it’s worth pursuing.

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Originally published on EtienneKiss-Borlase.net on March 2, 2022

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Altcoins to Watch in 2022

This year has had a rocky start for cryptocurrency investors. In November, many major cryptos hit new all-time highs, then suddenly fell by around 50%. Although altcoins are expected to surge this year, it’s essential to keep in mind that they may not replicate the massive gains of 2021. Due to the current economic climate, many investors are shying away from cryptos, which could take a long time to recover.

However, there remains strong potential and long-term gains for taking many promising altcoins. Here are just a few to watch.

1. Avalanche (AVAX)

In 2021, altcoins like Avalanche gained over 3,000%. Its fast processing speeds and low fees make it an attractive alternative to Ethereum.

According to DeFi Llama, 176 projects were running on Avalanche’s network at the time of writing, and it had a total value locked of $10 billion. It’s currently in fourth place.

2. Polygon (MATIC)

Instead of building a new blockchain, Polygon is an aggregation of layer 2s that make Ethereum faster and cheaper. Despite the upgrade to Ethereum’s network, which is expected to be completed in 2023, most developers still prefer to stay on the existing network instead of migrating to a new one. Some of Ethereum’s popular projects are already using Polygon.

Although Ethereum’s upgrade may not be completed in 2023, Ethereum’s founder Vitalik Buterin still holds that layer 2s will be useful in the future.

3. Enjin (ENJ)

Enjin is a platform that lets people create and sell NFTs — an industry that has seen rapid growth. It has a robust community, a reputation, and several proven use cases. Enjin is a project that focuses on non-fungible tokens, more commonly known as NFTs. They are digital certificates stored on the blockchain and used to purchase digital items.

The biggest threat to Enjin is the sustainability of NFTs. Although it had some surprising sales in 2021, it is still expected to see solid use cases once the hype dies down.

4. Cardano (ADA)

Due to its slow-and-steady development, Cardano has become a controversial project. Its supporters are disappointed with its approach to development, as it only released its smart contract functionality in September 2021.

So, what’s the bottom line? Looking for the next big altcoin is attractive but often a high-risk venture, as it’s prone to fraud and poor thought-out projects. While some altcoins may offer promising returns, many will fail. Instead of searching for coins that will surge in the short term, try investing in solid cryptocurrencies that will help you build wealth over time.

All cryptocurrencies are subject to risk, and it is wise to only invest in a few at a time. It avoids getting caught up in the inevitable technical issues and regulations that could affect the industry.

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Originally publishes on EtienneKiss-Borlase.net on March 2, 2022

Investment Banking For Beginners

What is investment banking? When you’re an investor, you’ll go to and rely on others to mitigate your payout with businesses looking for extra capital and vice versa. Investment banks are financial service companies that handle transactions on behalf of individuals, businesses, or governments; they are the middle man that makes sure the investment process runs smoothly. No matter what transitions you make in life, it’s ideal to approach financial advisors for said transitions—investment bankers do just this. 

The Sides

Though it seems simple, there’s more to investment banking than meets the eye. There are two sides of investment banking to be aware of: the buy side and the sell side. Neither side of investment banking can exist without the other. If there’s no one to buy from you, you won’t be able to sell anything; if there’s no one to sell anything, then there won’t be anything you can buy. 

• Sell Side: In investment banking, the sell side deals with trading securities (tradable financial assets like debt and equity). Securities can be traded for cash or other securities, depending on the investor’s wants and needs.
• Buy Side: Meanwhile, the buy side of investment banking provides informed financial advice to entities like private equity funds, mutual funds, and life insurance companies.

The Structure

Investment banks are generally split into three sections: the front office, middle office, and back office. Each section has its own daily activities that it’s responsible for to make sure the investment bank runs smoothly. The front office, for example, is the revenue generator of the company. Employees working in the front office are responsible for giving advice on mergers and acquisitions, sales, research, and so on. They are the customer-facing aspect of investment banks.

Meanwhile, the middle office is responsible for risk management and information technology, while the back office handles human resources, office management, and customer service.

The Services

Investment banks offer many services to customers, though they are often confused with regular banks’ investment banking divisions. The key difference is the services provided by investment banks; they usually have much more on their plates than investment bank divisions at a normal bank. Some of these services include:

Arranging Finance

Investment banks give businesses and governments guidance and advice when they need more capital for a big project. Bankers will plan out the finances for these projects, figure out when to issue corporate bonds, price them to demand, and sell them. Investment bankers can also help businesses figure out the starting price for initial public offerings (IPOs). 

Underwriting

Investment bankers also help people through a process called underwriting—financial risks for a fee. Banks will buy stocks and bonds for different businesses they work for, then sell those stocks and bonds to other investors on the market. They’re compensated for this work by marking up the price of the stock they bought, letting them make a profit on the stock or bond rather than break even.

The Industry

The investment banking industry is split into three different tiers: bulge bracket, middle market, and boutique market. The bulge bracket is what makes up the world’s largest investment banks, all of which serve large corporations, institutions, and governments as their clients. The middle market is similar to the bulge bracket, the only difference being the type of client they work for—the middle market serves smaller companies. Both of these tiers provide advice and financial services to their clients, do research, and help invent new financial products.

The boutique market, meanwhile, offers different services than the bulge bracket and middle market. This tier of bank specializes in one aspect of investment banking—a service or an industry, for example—and offers that specific aspect to businesses that need it. 

The Skills

As with every industry, people who get involved in the investment banking industry need to have certain skills to be successful. A few important skills to learn for both present and future investment bankers include:

• Financial modeling: Creating a representation of the client’s financial situation. 
• Business valuation: The process of estimating a company’s value.
• Sales and business development: Knowing how to generate revenue for a company and create long-term value for the company. 
• Relationship management: Being able to build and maintain solid relationships with investors. 
• Negotiation: Speaking on behalf of clients to get the best possible deal for all parties.

Conclusion

Investment banking is a wide and varied industry with many responsibilities. Having the basic knowledge of how this industry works will help you if you plan to work in this industry and assist you in your future as an investor.