2022 has been a tough year for global stocks. How tough? The S&P 500 is off to its worst start since 1939 – that is 83 years ago.
- The S&P 500 (SPY) is down 13% on the year.
- The Vanguard Global Stock Market (VT) is down 14% on the year.
- The tech heavy NASDAQ 100 (QQQ) is down 22% on the year.
This weakness has been driven by many leading stocks being absolutely crushed in 2022. For example:
PayPal (PYPL) is down 70% from the 52-week high. Take a look at the 6-year chart below, its unreal how far PayPal has fallen.
PayPal isn’t an anomaly. Lots of very good companies that have run into some speed bumps recently have also tanked.
Netflix (NFLX) is down 72% from the 52-week high. Take a look at the 6-year chart below.
Drug maker Moderna (MRNA) is down 68% from the 52-week high.
Crypto exchange Coinbase (COIN) is down 66% from the 52-week high.
Trading app Robinhood (HOOD) is down 78% from the 52-week high.
Dating app Bumble (BMBL) is down 67% from the 52-week high.
I expected to see a big uptick in volatility in 2022. That’s why I’ve been very focused on index funds this year and being more defensive. Overall we have done a pretty good job of navigating this volatility and avoiding land mines. However we have not been immune to a few blowups.
Many of my clients owned Meta Platforms (FB) when shares fell sharply in early February. I made the decision to sell Meta and we no longer own any shares.
More recently, two widely held stocks with my clients fell pretty sharply and I am currently evaluating how to proceed.
Amazon (AMZN) recently fell 15% in one day after reporting disappointing quarterly results and a weak forecast. Amazon shares are now down 35% from the 52-week, a very sharp pullback for a company like Amazon. I am currently watching Amazon closely and evaluating if we should continue holding shares and look for a rebound or if this is going to be dead money for the next few years. I will be in touch with updates.
The Andersons (ANDE), a leading agriculture company that merchandises corn, beans, wheat and plant nutrients, fell 30% in one day after falling short of first-quarter earnings expectations. With grain and fertilizer prices jumping higher in the last year, this stock had been on fire. Shares were up 50% in 2022 before this correction. Like Amazon, I am currently evaluating how to proceed with this stock. I will be in touch with updates.
This has definitely been a tough year to be an investor. There are land mines all over this market and It’s not a lot of fun watching your portfolio value go down. However I have a plan to navigate these choppy markets.
- Stay defensive, focus on index funds, bonds and cash.
- Food and energy sectors still looking strong and undervalued.
- Avoid overvalued tech stocks in general and particularly companies with no earnings.
Remember, despite short-term volatility, stocks are resilient in the long run. They have never failed to recover from even the worst bear markets, including WW1, the Great Depression, WWW2, 9-11 Terror Attack, the Financial Crisis of 2008 and finally from the COVID disaster that started two years ago.
Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading. Author Michael Vodicka owns shares of the S&P 500 (IVV), Vanguard Global (VT), NASDAQ 100 (QQQ), Amazon (AMZN), The Andersons (ANDE).