Great News: Last Year Was a Terrible Year in The Markets!

Great News: Last Year Was a Terrible Year in The Markets!

I know what you all are thinking, “this dude has officially lost his marbles!” 

I’ll answer that comment with two retorts.  First, I lost my marbles ages ago, how else can you explain why I hate dessert and have 1 wife, 2 dogs, and 3 kids?  Second, you’ll have to read the rest of this blog for my perspective on why last year presented great news.

Let’s look at this from a different point of view, shall we?  For starters, I’ll lay out the facts.  The markets had a terrible year last year, so much so it was the worst year in the markets since….. 2008.  That is right we haven’t seen a stock market this bad since the Great Recession.  Not only that, 2022 gave us the worst bond market, well since the Barclay Agg was created in 1976 with a double-digit loss.  In summary, worst stock market year since 08, and the worst bond market, well, perhaps ever. 

Now, how can this dude who lost his marbles, and runs a company that manages well over a billion dollars spew that anything about that was great news?  Listen, I totally get it.  I’m not suggesting that I am happy or root for a bad market year.  However, in my line of business, you learn a critical tool when it comes to investing and that is PERSPECTIVE.  Let me make a few points on perspective that I think hopefully will have you see things through a different lens.

Perspective on the Market

Perspective 1: Your plan likely still works.  As you are reading this, and knowing we are fresh off the worst market we’ve seen in well over a decade: how are your finances?  Are they unrecoverable?  I spent most of my time last year client-facing and rerunning financial plans for my clients.  From a professional standpoint, I can’t think of one of my clients that due to last year’s markets are now in a financial position that they simply can’t or won’t recover from.  The point is, the markets threw their worst at you and you are still standing to tell about it.  That is something that I would call Great News! 

Perspective 2: You have been waiting for this, and don’t tell me you haven’t.  You see when it comes to perspective, I have quite a bit of it.  I started in this industry in the tech boom, was hitting my stride just in time for the Great Recession to thwart any success goals I had, and now here we are 20-plus years later experiencing the latest market selloff.  I can tell you that since 2008 every year I have clients telling me markets can’t go higher.  Every year I have clients afraid the big selloff is coming.  I even have one client that has been calling and is afraid of inflation since I met him over a decade ago.  Well, you know the saying, even a broken clock is right twice a day.  Now you can go to that dinner party and tell everyone you were finally right, and not only that things aren’t that bad either.  Great news!

Perspective 3: In investing you must take the long game, which is what markets do.  Raise your hand if you didn’t know the markets go up and down.  Now raise it again if your entire purpose of investing is to make a lot of money really quickly.  Finally, raise it one more time if you think that market timing works and is a predictable way to invest.  OK if you raised your hand in any of those circumstances then investing, in general, is not right for you. 

The reality is that investing is a long game and should be viewed as such.  If you are an investor, you must be willing to understand that concept and recognize the markets go up and down.  Now, here is some enlightening perspective for you.  The S&P 500 at its low in 2008 was 735 points.  As of writing this blog, after a sizeable market selloff, the S&P 500 is at 3892 points.  I’m going to repeat that for dramatic effect.  In roughly 15 years the US stock market went from the worst market in 80-90 years to increase over 3000 points.  Furthermore, even at the market low during Covid we saw the S&P 500 at 2902 points. 

You see this is where perspective means literally everything.  You are still way ahead of the game if you take the long view.  Are your accounts as high as they were Jan 2022?  Likely not.  Are they higher than they were 2,3,4,5 years ago?  Almost certainly so.  Will they be higher again 2,3,4,5 years out?  At some point, I think we all believe that they will be.  This is simply what markets do and if you really take a step back and look at things if you stay invested long-term this will be nothing but a blip on the radar.  Great News!

Perspective 4: Things aren’t that bad, seriously.  Now, I am not addressing you personally on this one, and trust me I sympathize if last year brought you terrible series of events.  Generally, the worst years in our lives have nothing to do with the stock market.  Heck, my worst year on this planet was by far 2016 when I lost my father.  I tell you this to let you know I sympathize if tragedy struck your life last year.

That said, I already addressed that markets are historically not that bad right now.  But as we take a step back and look at the overall economy here is what we know.  Employment is at a record low, inflation is starting to reverse, and even interest rates, albeit higher than we are accustomed to, aren’t far off from historical averages.  Juxtapose that against the economic environment in 2008 and you see a world of difference.  Great news!

Great News

I always thought there should be a nightly news show called great news.  You see I stopped watching the nightly news ages ago as I got sick of hearing nothing but the worst of what is going on around me.  If that were my only perspective on the world around me I’d convince myself it is nothing but murderers, thieves, and criminals.

What if a news station simply chose to show us the good in society and the world versus the bad?  What if we conditioned ourselves to block out the negatives and focus on the positives?  How would that change your perspective on things and morph your outlook moving forward?  What if, what if, what if.  Well, I am here to tell you that you lived through simply a bad year in the markets, and for most of us that is it.  It is expected, it is what we signed up for, and clearer skies are ahead.  GREAT NEWS!

As always wishing you nothing but wealth, health, and happiness. 

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