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
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 Kvantas is a Certified Financial Planner™. She is a member of NAPFA, NAPFA Genesis, the Financial Planning Association, and FPA NexGen, and she has been quoted in InvestmentNews.