At the start of the 3rd quarter, increasing risks entered the thinking on investments. Investor enthusiasm waned throughout July and August as risks grew and intensified. September now ends with a decrease in the bullish scale of the market and moderating investor optimism.

But … that’s good news. Widespread recognition of risks and altered attitudes are just the necessary tonic. The combination helps lay the groundwork for a further rise in the stock market.

What new stock market trends can we expect in 2022?

First, don’t expect growth and speculation to give way to value and conservatism. This only happens when a stock market drops sharply, causing previously optimistic investors to retract and become pessimistic.

But expect the now-broken fads to fade: SPACs (Special Purpose Acquisition Companies), “meme” stocks, and overvalued IPOs. Negative performance erodes even the strongest modes.

Instead, expect to focus more on what’s already happening: companies taking actions that increase their growth prospects, including acquisitions, divestitures, new strategies (e.g. pricing and operations). ), horizontal and vertical expansion and financial restructuring.

The seemingly negative pandemic effects and resource / commodity shortages are encouraging and allow organizations to innovate and change.

The news of cash-rich organizations bracing for the post-Covid growth economy is a sign of more than capital spending plans. Liquidity provides a cushion for risk taking and a tool for growth.

This growth environment will include rising inflation and interest rates. These upward movements naturally accompany periods of healthy growth as the demand for resources, products and services increases. It’s important to note that the Federal Reserve has explained why not interfere with this natural growth transition.

What will be left – for now

It’s not exactly a fad, but there is a widespread willingness to pay for a growth story. Classical fundamental analysis takes a back seat. Even negative gains are ignored. In fact, positive gains appear to be a limiting measure, producing the question “Is this all you’ve got?” Preference is a sight of untold riches when the gripping story unfolds as planned.

It is important to note that this investor perspective is not new. It cycles when the conditions are right (and vice versa). It also brings the ineffective warnings of an overvalued market.

Looking ahead to a good stock market in 2022, there is no apparent reason to expect these issues to change.

An exciting strategy could return

This strategy is the acquisition of a business at a value price by a growing business. Using the higher-priced shares of the growing company for acquisition can generate disproportionate revenue and profit growth. Better still is the use of cash, especially in a period of growth where financial aggression is accepted and even viewed positively.

The main public rationale behind this strategy is “synergy” – the 1 + 1 = 3 point of view. In many cases, synergy occurs and is valuable. However, in other cases, especially when the strategy is gaining popularity, it is not. Joining two different organizations, people and cultures is a challenge. The mere fact of bringing together two separate organizations necessarily creates disruption and conflict that can affect both operations.

The bottom line: now is the time to prepare for 2022

Start with a new vision for the investment strategy. The mix of risks and fads this quarter appears to be at its peak. This means that the future is ready to move in.

There will probably not be a global change. Corporate actions will aim to profit from economic growth, inflationary pressures and a return in market-determined interest rates. In turn, all of this should drive up the stock market and investment returns.

This final week of Q3, with the facade going on, means it’s a good time to consider establishing positions that could benefit.