Financial Planning Fridays #20: 2022 Review

Today, in our twentieth episode, we wanted to discuss and review 2022.

Last year was filled with lots of good news but also more than a few negative headlines that made the market one of the most volatile ever. As usual, we took advantage of this volatility and rebalanced our client accounts 27 times; each time the S&P 500 moved up or down five percent. We especially looked for opportunities to add to stock and put our clients’ portfolios in an even better position for the eventual recovery. We were also able to complete tax-loss swaps throughout the year to help reduce our clients’ taxes this year and potentially in future years.

The S&P 500 was down about 20% for the year as of December x which is only the 5th time since 1932 that it has finished down 20% or more for a calendar year. A few of the headlines that dominated the market this year were:

  • the Russian invasion of Ukraine
  • Inflation reaching a 40 year high
  • the federal reserve raising interest rates at the most aggressive pace in 15 years
  • Crypto’s collapse
  • a very contested mid-term election.

We were inspired by the 12 days of Christmas and wanted to share 12 market facts from 2022. We will start with a few of the unfortunate stats then move to a few positive ones before giving you a great reason to feel optimistic going into next year! Brook originally wanted me to sing the 12 facts but after seeing the first cut decided to save that for next year after I have had more practice.

1. Eleven percent stocks in the S&P 500 have had their worst year ever. Sixty five of the stocks in the S&P 500 are down more than 40% this year.

2. Longer term bonds were no longer a safe place to hide with the 30 year treasury bond down 28.4% and the 10 year treasury falling 13.91%.

3. Ten of the 11 industry sectors that make up the S&P 500 were down this year with communications down the most at around 40% and Energy being the only positive sector.

4. Bitcoin and Ethereum, the 2 largest Cryptocurrencies were down about 65%. It is estimated that about 13% of Americans have purchased some kind of Crypto currency.

  1. YTD Return of Companies in the S&P 500
  2. S&P U.S. Treasury Bond Current 30-Year Index | S&P Dow Jones Indices
  3. S&P U.S. Treasury Bond Current 10-Year Index | S&P Dow Jones Indices
  4. Sectors & Industries Overview – U.S. Sectors- Fidelity
  6. US House Price Index (I:USHPI)
  7. US consumers are spending more, despite rising inflation | World Economic Forum
  8. FIMM Money Market – IC (FNSXX) | Fidelity Institutional
  9. 1 Year Treasury Rate (I:1YTRNK)

5. U.S. Home prices peaked in June 2022 and began to decline after more than doubling over the past 10 years.

6. The S&P 500 was up or down one percent 118 times this year; very close to the record set in 2002.

7. International Stocks outperformed U.S. stocks by about two percent in 2022. We were rewarded for continuing to hold international stock in our clients accounts and especially by adding to European and Asian stocks this summer before those areas rallied in the last quarter of this year.

8. Consumer spending in the U.S. continued to be resilient and increased by about two percent compared to 2021.

9. Just 59% of Americans own stocks. This is highly correlated with education; the further an individual has gone in school the more likely they are to own stock.

10. The yield on the Fidelity institutional money market fund went from a yield of 0.04% at the start of the year to almost 100 times as high at 4% by year-end.

11. The one-year treasury rate jumped from 0.4% on January 3rd to 4.65% on December 15th! We can finally earn reasonable interest on our savings and bonds!

12. And finally, a great reason to be optimistic for next year as we look back through history; the S&P 500 has only been down more than 20% in a calendar year four times in the past 90 years. The year afterwards was positive every single time with an average gain of 26.6%!

We are very optimistic going into 2023. We are excited to work on our clients behalf to take advantage of whatever the world and market brings us next year while giving them an amazing experience!

Thanks again, and Happy New Year!

Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.