2022 Market Year in Review: It’s Finally Over
As we enter the final days of 2022 this year will always be remembered as one of the worst years for stocks in history. Growth and tech stocks that had led the markets for so many years were decimated. The NASDAQ index is down by more than 30% while the benchmark S&P 500 index lost nearly 20%. For those investors who had never seen a bear market before, 2022 was certainly an eye-opener. Apparently, stocks don’t always just go up.
Now that we stand on the precipice of a new year, it’s hard to imagine things will be much better in 2023. The world is still teetering toward a global recession and central banks continue to raise interest rates in an attempt to battle inflation. Global supply chains are still being impacted and COVID-19 is still rearing its ugly head. It seems that not much has changed in the past three years.
What Did We Learn in 2022?
What did we learn? Personally, I was amazed at how mortal the mega-cap tech stocks looked. Tesla ($147.05|-1.92%) and Meta Platforms (NASDAQ: META) fell by 69% and 65% respectively, losing hundreds of billions of dollars from their market cap. Despite the success of previous stock splits, both Amazon ($174.63|-2.56%) and Alphabet (NASDAQ: GOOGL) failed to gain any traction amongst investors at their lower prices.
I think many of us learned about how fragile the economy is. We learned about treasury bond yield curves and the Volatility Index. We learned that in a bear market, even though the stock is cheap it does not mean the price will not continue to fall. I also learned the value of holding a balanced portfolio of blue-chip stocks and even ETFs to counteract market volatility.
What Will We Learn in 2023?
I think that in retrospect, many of us will regret not buying some stocks at their current prices. It’s never easy to determine when the bottom is in and often times we don’t realize it until the market is back on an upswing. We could wake up in January and inflation has suddenly been slashed in half. Nothing can prepare you for the market surge if that day comes.
I hope that many of you have learned the most valuable lesson of all: to stay invested in any market environment. As someone who has invested in previous bear markets in 2000 and 2008, all I can say is: this too shall pass. I’ve learned over the years to be patient with the markets and I hope that 2022 has taught you the same.
I promise you there will be a day when we look back at this and laugh. I can also promise you that there will be several more bear markets in our lives. The 2022 year in review for the markets isn’t a great one but it is certainly valuable. Sometimes it is the lessons that we take away that help us the most in the future. Here’s to a better year for the markets in 2023!
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