short-term investments in 2022

5 Best Short-Term Investments for 2022

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Learn how to find the best short-term investments for 2022 and what to invest in .

You’re on the Millennium Force roller coaster at Cedar Point, Ohio…you leave the station and are immediately lifted into the clouds only to drop 300 feet straight down. The entire ride, you’re thrown higher and then come crashing down, subjected to a dizzying two minutes of loops and turns…but in the end, you end up right where you started.

Remember that analogy…because it could be exactly like investing in 2022.

The wild rises followed by stomach-churning drops…the stock market could make even the most experienced investor lose their lunch next year, suffering the ups and downs only to end up at exactly the same place with your portfolio.

Now, I’m not one of these chicken littles calling for a stock market crash. With interest rates at historic lows, a healthy jobs market and free money policies from the Fed…you don’t get a stock crash in that environment, but you will get volatility. You will get those roller coaster ups and downs, and if you want to make any money investing in 2022…not only to end up where you started, but to make money…you need a short-term investing plan.

In this video, I’ll explain why the 2022 stock market will be that monetary roller coaster and why even long-term investors need a short-term investing plan. I’ll show you how to find short term investments and how to decide on an investing strategy. Then I’ll reveal the five best short term investments I’m watching for 2022.

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Now I want to get in on those short-term investing ideas but all you out there in the Nation know, I want you to understand WHY I’m watching these investments…how to reason through the stock market and be ahead of the game so you can find your own investments. As much as I love our little Bow Tie community, I don’t want you to be forever dependent on some Yahoo on YouTube for your investing ideas.

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So I want to quickly cover the catalysts for that market volatility in 2022, the reasons why stocks could be that roller coaster ride next year.

Nation, you only have to look at a stock chart of the Nasdaq or any tech stock over the last five years to see that something broke the market in 2020. This is a ten-year chart of the Nasdaq index and we see, over the eight years to 2020…tech stocks did really well, producing a 16% annualized return which is an amazing bull run.

But then, what the hell happened over the last 20 months? Tech stocks, and really the entire market, have boomed higher, rising 75% since January of last year…that’s about a 45% annualized return!

And it doesn’t take a rocket scientist here. The Federal Reserve, the nation’s central bank, has pumped more than $4.4 trillion into the economy through those pandemic measures. That’s a fifth the size of the economy in one year.

If there was any doubt, this shows the Nasdaq tech stocks index in green and the Fed balance sheet, so the amount of money the Fed is pumping into the economy, and you see they track each other almost exactly.

And that doesn’t include the additional $4.7 trillion spent by the U.S. government in stimulus checks, loans and all other pandemic spending.

Now this isn’t to say that money wasn’t needed to avoid an economic depression but the bill comes due, it always comes due, and as investors you need to start thinking about the consequences before that happens.

The Fed is already paring back the money it forces into the economy and even on proposed government spending, it’s still going to be a multi-trillion drop from last year. So as less money gets pushed into the economy, you take away one of the legs of support we’ve seen in stocks these last two years.

Another support on stocks has been historically low interest rates. This shows the interest rate on the ten-year Treasury, the benchmark against which all other interest rates follow, and you can see it’s averaged just over 2% in the eight years to 2020. To spur economic growth, the Fed cut its funds rate which caused the 10-year to plunge, averaging just 1% over the last year and is still at just 1.5%.

That’s important for two reasons. First is that interest rates are the cost of borrowing money. Lower interest rates means cheap money for businesses to borrow and higher economic growth.

It’s also important for investors because interest rates directly determine the return you can get on things like bonds and other fixed income investments. Because interest rates have been so low, all the pension funds and insurance companies have been forced out of bond investments and into stocks. You might have heard about this as a reason for strength in stocks called, TINA or there is no alternative.

Looking back at that chart though and you can already see interest rates have jumped off their lows and are expected back up to that 2% level over the next year. That pulls yet another leg of support away from stocks because investors can start getting a better return in bonds and higher rates won’t be the same economic support they were previously.

Again though, I’m not calling for a full-blown stock market crash. The job market is strong, there is still a lot of money in savings accounts ready to be spent and the economy looks good.

What it does mean though, as you get the multiple areas of support pulled out from under stocks, you start to see those price swings come back. You get the roller coaster ride in stocks rather than just a ski-lift ride straight up.

Stocks in the S&P 500 went 227 days this year without a correction, a drop of 5% or more in prices. That is historically long and has lulled investors into a false sense of security that stocks only go up.

How to Make Money on Stocks in 2022

All this means that, if you want to make money on stocks in 2022, you need to be ready for bigger stock swings, be ready for what’s going to drive them and with the short-term investments to take advantage of it.

short-term investments in 2022

This first short-term idea is a new one, selling monthly options against the bitcoin ETF for as high as 10% a month.

And this strategy is something we talked about comparing the income ETFs like the QYLD a few weeks ago, creating monthly cash flow on those stock positions and it works so well because of the high volatility in the Proshares Bitcoin ETF, ticker BITO.

We can go into the options for the ETF and I like this as a short-term, monthly strategy so we’ll pick the options expiring three weeks from now, the November 26 expiration.

The fund is trading for $42.56 per share and if we scroll down, we can sell the call options with a $42.50 strike for $3.20 each. That means we collect $3.20 per share for selling another investor the right to buy the shares from us for $42.50 each at the end of the three weeks.

That lowers the cost we paid for the shares down to $39.36 each so if we do end up selling the shares for $42.50 then we’ve made almost 8% in three weeks…less than a month’s time. And just as good, if the stock finished below that $42.50 price in three weeks, we keep the shares and the money which means we collected that 7.5% cash return and can sell another call option for the next month.

And yes, options strategies can be confusing at first but these are some great tools to have in your investing toolbox, especially when you find these volatile stocks and funds where the options prices are so high. Don’t feel like you have to totally understand it right away. I did a full video on my favorite options strategies a few months ago that details the strategy quite a bit so I’ll link to that below. Basically, you’re collecting a cash return immediately on your stocks to lower your risk and boost that return.

short-term investments in 2022

This next short-term investment is one I’ve highlighted a couple times, earning interest on stablecoins through BlockFi.

There is a huge demand for lending stablecoins right now in international transfers as well as other transfers where you need fast and frictionless payment processing without all the fees charged by banks. Because of this platforms like BlockFi are paying interest rates up to 9% on accounts. It’s a lot like what a traditional bank does with your savings, paying you interest and then loans it out on mortgages but here, you have a savings account holding stablecoins and the platform makes loans on that…except the rate BlockFi is paying out right now is more than 150-times the average .06% rate you get from the bank.

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And this is such a great short-term investment on couple of levels. First, that interest and the rate doesn’t depend on the stock market. In fact, the rate could increase as other interest rates increase so you’ll continue to earn that money whether the stock market rises or falls.

Second though, you earn that interest every single day. This gives you the flexibility to sit out the market, still make a great return but then have the cash available to buy back into stocks whenever you want.

I’ve made over sixteen-hundred on interest and earn about $25 a day or about $750 a month in, and that’s interest on my stablecoins as well as my investments in bitcoin and Ethereum. I’ve got about $80,000 in stablecoins with a 9% rate or about $600 a month of that total.

Now of course, any time you see a high-yield interest on what amounts to a savings account, you’ve got to ask what’s the catch…is it too good to be true. The drawbacks to stablecoin interest are, first you’ll notice BlockFi only pays that top rate on the first $40,000 in coins…so if you have more than forty-grand in any one stablecoin, you’ll earn a lower rate.

I get around that by having part of my savings in USDC and part in the PAX stablecoin, so I come in under $40,000 each and make the top rate on both.

Another drawback is, these aren’t FDIC insured like you get with bank savings. So while I don’t think you have anything to worry about because these coins are backed by real assets like commercial paper that keeps their value, it’s not a guarantee.

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I’ll link to a few videos in the video description to help you understand bitcoin and how the investment works. It takes less than five minutes to open an account on BlockFi and you can deposit directly from your bank. Click on the link I’ll leave in the description and you’ll get up to $250 in free bitcoin when you open an account.

We’ve still got three more of those short-term investments to highlight but all you out there in the Nation know, I’m not about just dropping those ideas in your lap and to tell you what investments to make. I want to show you how to find these kinds of short-term investments, what to watch for so you can find the best every time.

short-term investments in 2022

Through these five investments, five trades, you’ll notice themes like market mispricings and using different types of investments for a short-term return. These kinds of investments are all around you if you know where to look, so I want to cover three strategies to use.

Short-Term Investing Strategies for Massive Returns

One of my favorite strategies is the riskless or hedged investments, the trades where your return doesn’t depend on the direction of stocks. For example in our stablecoin interest investment, those rates are paid whether stocks rise or fall. The interest paid is backed by the money BlockFi collects on loans. Another example I’ll show you later involves buying an investment and then pairing it with a bet against that same investment in futures…essentially creating a risk-free trade to make up to 20% a year.

Another strategy for short-term investing is by taking advantage of market mispricings in different types of investments like stocks and options. Like we saw in that options investment, the volatility in some of these meme and growth stocks is so out-of-whack that you can make a strong short-term return while taking a lot of the risk out of the trade.

And my favorite trading strategy, using the longer-term investing we do here on the channel but looking for a short-term catalyst that can send the investment booming! I’ll show you how to do this in our next investment but you’re looking for stocks with strong long-term upside potential and then narrowing your list to those with possible near-term events that can really jumpstart that growth.

The next short-term trading idea is similar to the bitcoin options strategy, using options for cash flow and return on meme stocks.

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I’ll be using a covered call options strategy where you buy a stock and then sell call options against it. Selling calls gives another investor the right to buy that stock from you for a set price over a set period and for that, they pay you a cash premium now.

And why this works so well with meme stocks is because the volatility in those stocks, the huge price swings in the shares, means you collect more from those options.

For example, this is an actual trade I set up in October with shares of Bed, Bath and Beyond after a disastrous report sent the shares down more than 30% in a few days.

You can see here, I paid $16.99 for 700 shares and immediately sold seven call option contracts…remember each contract is for 100 shares, I sold those at a strike price of $20 and collected $1.59 per share.

What does this mean. By collecting that $1.59 per share, I collected a 9% return on the investment immediately and there are only two outcomes here.

If the stock finishes above $20 by the end of the option expiration January 21st, then the investor exercises that option and buys them from me for that price. I get an almost 18% return on the investment plus I keep the 9% cash return for a 27% total return in less than three months.

On the other hand, if the shares finish under $20 each, that investor isn’t going to buy them from me for that amount. I’d keep my shares and sell more call options against them, probably the next month’s options for another five- to 10% cash return.

As it turns out, the stock soared past $20 each recently so it looks like I’ll be collecting that 27% return over the three months and can reinvest in another stock.

5 Short-Term Investments to Help you Make a Lot of Money in 2022

I know you want to get back to those investing ideas but I want to take one minute to show you how I found these investments, two rules that describe the difference between short-term and long-term investing. These five short-term investments will help you make money in 2022 but I want to give you the tools that will make you rich EVERY YEAR!

This first one is difficult for a lot of investors, but you have to cut your analysis of fundamentals. For these short-term investments, it’s much more about investor sentiment and that herd mentality than it is longer-term things like operating margin or valuation.

And again, this one is tough for a value investor like me. I always want to analyze the long-term potential of an investment and get the best value but that’s just not applicable for short-term trades. You have to be able to find the investments that will spark that investor enthusiasm, no matter the price.

Next here is you have to be able to think like a contrarian. A contrarian is an investor that thinks against the current market trend or assumptions.

And this is a great opportunity that most investors just don’t take advantage of. The market, and especially some of the investments we’ll talk about like futures and options, is an auction machine. The stronger consensus there is on one side of the trade, the cheaper the other side is to take…and the higher the payoff if it ends up being right.

Fourth on our 2022 investments list is penny stock investing but with short-term catalysts to send the stock higher.

Now we’ve covered penny stocks on the channel but it’s usually that longer-term, venture capital kind of approach where you’re looking for startup companies that can 10X your money over three- to five-years.

Here you’re still doing that research into finding good long-term growth but you’re going a step further to find those with near-term events that could jumpstart that growth.

An example would be HealthLynked Corporation, ticker HLYK, a $69 million healthcare provider.

The company provides a cloud-based network in healthcare connecting patients, doctors and data. Patients and doctors can check records, enter symptoms and schedule all online.

These kinds of virtual services and software are the future of healthcare. It may not replace all your doctor visits but it will replace many and I think a lot of these startup virtual health services companies start getting bought up by the big players eventually.

Mobile and telehealth is already an $18 billion market according to Bloomberg Analytics and growing at 30%-plus a year. Revenue jumped 52% last year to $6.1 million after nearly doubling in 2019 and the company books multiple revenue streams through reimbursement and marketing. The balance sheet here is healthy with $2.6 million in cash against just $1.1 million in debt so a cash positive position and plenty of runway to develop the company.

And the near-term catalyst here would be the worker shortage, especially in healthcare workers, that could drive growth for these kinds of virtual systems. The company just launched a new version of its patient check-in system in October using a single QR code for remote check-in that I think could help boost revenue over the next year.

So you have that solid long-term penny stock investment but with a short-term catalyst that presents an upside opportunity. Shares were as high as $0.94 each in the last year, which would be a 200%-plus return just back to that peak.

I’ll reveal my favorite short-term investment next but we need to talk about the big question here, the question most investors don’t ask and end up losing their money in these kinds of trading strategies…how much risk are you willing to take for how much return?

Nation, some of these investments are about as low-risk as you get but there will always be a trade-off between risk and return. Anyone promising lottery-ticket type returns for no risk either doesn’t know what they’re talking about or is trying to sell you something.

Well, you know I’m not going to blow smoke up your ass like that.

So anytime you’re looking at short-term investments, or any investment for that matter, you need to rank your options by risk and return. How risky are each of those investments and what are the returns you expect on each?

For example, a ranking of my five short-term investments might look like this with stablecoins and the cash and carry strategies listed for the lowest risk all the way to the highest risk on a penny stock investment. As for returns, I can earn 9% right now on the stablecoin interest…the lowest annualized return of the group but again it’s also the lowest risk. Compare that with returns we made on penny stocks as high as three- and four-hundred percent last year but also with risks of losing thirty- and forty-percent.

Don’t just go with that highest return potential but really think about your options, how much risk you want and which investment is best for you.

short-term investments in 2022

This next one is easily my favorite short-term investing idea, the best I’ve seen in a long time, the cash and carry trade on bitcoin.

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This is a great monthly trading strategy that I’ve used to earn up to 20% annualized returns for months now but it’s not going to last. I say you take advantage of it through 2022 and enjoy it while it lasts because it’s a rare, low-risk and short-term way to earn a high return.

The cash and carry trade means you buy an asset, usually a commodity or currency, and then sell futures contracts against it at the same time. And how you make money here is by finding those assets where the current price is less than the futures price, so you lock-in the difference.

Let me show you an example. We can go to BlockFi and see the current price for bitcoin is at $63,011 each. Now we can go here to the CME, that’s the major exchange where futures are traded, and we can see each month’s contract prices for bitcoin. This October contract expires in four days so we’ll use the November futures for a reference. And you see here, one-month futures for bitcoin are trading for $63,928 each…that’s more than 1.4% above the current price in the market. Or another way, there is a $900 difference per bitcoin between the current price and these contracts to buy or sell.

So what you can do, and this is how a lot of big institutional investors are making a LOT of money right now, is you buy bitcoin and hold it in your account and at the same time, you sell a futures contract against it. This means you have the bitcoins and at the same time, a contract to sell those bitcoins to someone else when that contract expires in a month.

Nation, this is only paying such a high return because the only ETF option for bitcoin investors is through those futures funds. Billions of dollars have gone into these funds and that means a massive demand in futures contracts, pushing prices above that current bitcoin price. Now the return here could shrink once a regular bitcoin ETF is approved but until then, you’ve got the opportunity for double-digit short-term profits.

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