The Markets Were Miserable Last Year, But That’s Great News

It’s not a shock that the markets had a pretty abysmal year last year, in fact the worst since 2008. Not only that, 2022’s double-digit loss was the worst for the bond market since 1976, the first year tracked by the Barclays Agg. That being said, the miserable market is great news — but how?

It’s all about perspective, and the one thing that a terrible year in the market does is give us all some perspective, both in investing and in life in general. There are a few perspectives that we can all take thanks to the 2022 market outcome.

First, your financial plan has been tested, and you’re likely in an all right place. The whole purpose of a financial plan is to see you through the market ups and downs, and 2022 was certainly a downturn. The good news here is that your financial plan got a thorough test in last year’s market, and you’re likely in a spot where you will still recover and can rely on your plan.

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If you’re not, that is something that you can adjust and work through. If you need help, you can rely on a financial adviser or planner for advice. But take solace in the perspective that the markets threw what could be their worst at you, and financially you made it through.

Secondly, investing is a long-term process, and hopefully that is something you’ve realized over the last year. If you’re investing in order to get rich quickly or for short periods of time, then investing may not be for you — because you need time to ride out the market ups and downs.

The S&P 500 hit 735 at its lowest point in 2008 (before going even lower in 2009), while after a decent-sized sell-off in early 2023, we’re looking at a market around 4,000 now — which is an increase of more than 3,000 points. These increases take time, and you need to ride them out.

The final perspective you need to take is zooming out and looking at the bigger picture. When you think about your life in general, the worst years likely have nothing to do with the market. And if 2022 was one of the worst years of your life (market or not), here’s hoping that next year is an improvement.

The good news is that 2023 is already looking brighter. Unemployment is at a low, inflation is seeming to abate and reverse, and interest rates aren’t too far from where we’re accustomed to seeing them.

As you can see, it’s all about perspective, and while the markets may not have performed how we liked last year, there’s hope ahead for a better tomorrow.

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