Market Update: What 2022 Could Mean for 2023

January 30, 2023

What investing lessons from 2022 could help us become a better investor in 2023?

Last year’s investing environment included many reasons investors could have used to sell underperforming holdings in their portfolios, including:

- Inflation impacts
- Mid-term elections
- War in Ukraine
- Interest rate spikes
- A bear market in stocks
- Negative bond returns
- Crypto and tech stock crashes
- Inverted yield curves

Learning From Last Year

In today’s video, we discuss several questions of what we can learn from last year’s investing experience and what we could expect for 2023.

Why 2022 was a challenging year in stock and bond markets?
What was historic about the year for bond returns?
Could there be a silver lining for stock returns?
How do markets react in the years after a down year in stocks?
The range of emotions when holding a diversified portfolio
Why you’ll always hate something in your portfolio
Which 7 stocks held back the S&P 500 in 2022?
When does a growth stock become a value stock?
What 6 different “expert” companies are predicting for returns over the next 10 years?
Why does having an investment plan informed by a financial plan matter?
Do you have a monitoring process to know when or when not to act with your portfolio?

Having a Plan Matters

Recent history could provide a blueprint that helps you stick with your plan. Understanding that handsome rebounds follow steep declines could help you capture the long-term benefits the markets offer.

The magnitude of past market declines can fade fast in your memory, but can be very valuable when in the midst of new down markets. For example, investors that sold stocks during the dot-com crash in the early 2000s didn’t get the opportunity to enjoy the recovery that eventually followed. Similarly, those abandoning a plan early in the 2008–09 financial crisis, or in March of 2020 as COVID fears spread, missed out on much of the subsequent rallies. That’s because markets can move quickly with much of the large increases occurring near the bottoming of stock prices.

Reflecting on these moments might give you the confidence to stick to your investment plan, but it’s not easy. Having an accountability partner in the form of a financial advisor could be the extra step you need to assure you reach your ideal retirement.

Past market updates

Resources

DFA article – This has been a test
Dimensional – Market Review 2022

Mike Eklund

Mike Eklund is a CERTIFIED FINANCIAL PLANNER™ practitioner. In addition, he has an MBA in Finance and the Chartered Retirement Planning Counselor designation. He is an active member of NAPFA, is the co-host of Financial Symmetry's podcast, and has been quoted in various industry publications.

Grace Kvantas

Grace is a partner and Certified Financial PlannerTM with over 12 years of experience in financial planning. She helps busy families and individuals plan for retirement, save taxes, and simplify their financial life.