After a Record-Bad 2022, Here’s What Investors Can Expect

Last year, 2022, closed out as one of the worst years for investors on record. Stocks suffered a bear market, with the S&P 500 down 20% from its January high, and the Nasdaq lost 35%.

These numbers weren’t close to records, but when you add the record decline in bond prices, it was one of, if not the worst, year on record for a balanced portfolio.

What clues does history offer as we look ahead to 2023?

First, I think making historical comparisons is challenging in this modern world. Investing and trading are very different today. Most of the past results occurred before we had an instant news cycle and the ability to trade without paying large commissions. For example, before the 1990s and the widespread use of the Internet, stock prices showed up daily in the Wall Street Journal, and it cost $100 or more in commissions to trade 100 shares of stock.

With that in mind, let’s look at some stock market history. In the last 50 years, the S&P 500 has posted consecutive down years just twice. The first occurrence occurred five decades ago, in 1973 and 1974. And the market experienced three successive down years, from 2000 through 2002. The Great Financial Crisis had just a single negative year, 2008. The market bottomed in March 2009 and finished with a 26% gain for that year.

2009 may be a good reference for 2023. When the market turned higher after that March bottom, stock prices went gangbusters. From its 2008 closing value until the March 2009 low, the S&P 500 dropped by 26%. It was a brutal time to be an investor. But…

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