To say that 2022 was a challenging year for investing in financial markets is an understatement. By all accounts, 2022 was the worst year for financial markets performances since 2008. That’s over 14 years ago since we have had the financial markets perform so poorly. In many ways, 2022 was a bit worst than 2008 because there was no safe place to hide to avoid the losses that occurred last year. Although bonds are generally considered a diversified investment that should soften the blow when the stock market goes down, that was not the case this time. Bonds also experienced a very tough 2022.
So how bad was it? Just look at the following table to see how the financial markets performed in 2022:
No matter how you look at it, 2022 was a shellacking for the financial markets. Even if we look at how the sectors performed, most of the sector performances also had a tough year. Let’s look:
As you can see from Table 2 above, there were two bright spots that has positive investment returns in 2022. The positive sectors were Energy (think about the price of oil and the high gas prices that we were paying throughout 2022) and Utilities (think about the electricity, heating, and air conditioning we use to power our homes). Other than these two sectors, everything else was tough going.
Through all of the negative performances we had in 2022, this is the time to trust the investing and wealth-building process. We are long-term investors; therefore, we do not get too high or too low when we see short-term market performances whether up or down. As famed investor Peter Lynch once said, “The real key to making money in stocks is to not get scared out of them.”
The one silver lining was that the 4th Quarter of 2022 started trending in a more positive direction for the major financial markets.Please see Table 3 below.
Although the 4th Quarter investment trend direction for 2022 is no guarantee of future investment performance, this just goes to show you that things can change at any time. That’s why it is often said, “don’t try to time the market, it’s the time in the market (that counts).”
Here at Paycheck to Wealth, we are firm believers that getting started and consistency are the keys to growing your wealth. Let’s make 2023 your year to either continue on the path or to get on the path to a successful wealth-building journey. It’s your move. Let’s have a great and impactful 2023.Please contact Paycheck to Wealth today to learn more.