2022 What a Year!
As we enter into a new and hopefully more prosperous 2023 here are some reflections on 2022 and looking ahead at 2023.
What a year 2022 was, allow me to re-cap some of the “highlights”;
• Bad news on the economy was rewarded by market growth and good economic news resulted in the markets crashing.
• It seems nothing was immune except oil and gas.
• Manager returns ranged from positive15% to negatives near 50%.
• Even bonds were not immune- losing double digits.
• Inflation fears stoked the Fed and Bank of Canada to raise interest rates higher and faster than in recent memory.
• Real estate drove higher and dropped precipitously; elevated interest rates will likely result in further price drops as affordability appears to be key driver of prices.
• Chinese COVID lockdowns and Russia’s invasion of Ukraine resulted in supply chain issues and shortages of food, micro-chips and medicine.
Hindsight is a wonderful tool but not very handy in the world of investing. Those with a memory will recall seeing markets drop 30 percent early in 2020 only to end up one of the strongest years for US markets in a long time. The proliferation of pseudo media outlets living by the mantra “if it doesn’t bleed it doesn’t lead” left us all wondering if this is the end of normal.
In my 35 years as a financial advisor, I have to say this was the toughest year ever, but most of you did as I did – trust the process. Some of us with extremely high confidence in markets returning to normal sooner than later continued buying and even got more aggressive. A few went to cash which has worked out so far but it has never worked out in the long run in my experience as buying back in is tough.
What to look for in 2023?
• I’d like to echo Noah Blackstein who told me over dinner that this market has created a generational opportunity for wealth creation, but he has a vested interest in seeing people stay invested or even buying more.
• I’d like to echo other managers and say that the US market is definitely poised for underperformance, but they too have shorts on certain sectors and will win handsomely if the US market continues downward.
• Instead, all I am left is to focus on what my 35 years’ experience is telling me and which I am following without hesitation – stay patient, buy if you can afford it. Opportunities are there.
Warren Buffet famously said buy when others are fearful. You don’t get good stocks at great prices when everyone thinks the market is going up forever.
Your managers have been actively buying and selling, all year with 3- 5 years on their minds. All of you have time frames longer than that for your assets, however if you are losing sleep then reach out. We can talk, reassess things and if necessary, move into lower volatility vehicles or strategies – but do stay invested and 2022 will be a thing of the past in your investment history.
Hoping for a healthy and prosperous 2023