Can I trust the markets in 2022?

Today we’re looking at market pullbacks, and whether we can trust the markets in 2022. Specifically, when a market drops at the start of the year, what does that mean for the remaining months? Some jarring news to kick off: looking at the S&P 500, 2022 has actually been the fourth worst start to a year since 1928. Let that sink in for a second… the fourth worst start to a year in almost a hundred years. This is a period that has included the Second World War, the Cold War, global financial crises and many more.

 

In the first 48 days of this year, the S&P fell 11.8%. By comparison, the worst ever start to a year was in 2009 as the credit crunch took hold – here, the index fell by 16.9%. However, after these initial 48 days, the S&P then went on to return a whopping 48.5% in the remainder of 2009 – incredible returns and yielding a significant profit on the calendar year.

 

This trend extends to other years with poor starts. In fact, the worst 15 years in terms of the first 48 days actually average a 22.5% return for the rest of the year. Only two out of these fifteen years failed to turn a profit on the calendar year – and these were 2001 (which saw the terrorist attacks on the World Trade Centre in September) and 2008 (the year that sparked the Global Financial Crisis).

 

Of course, no one can predict the future, but these are encouraging numbers for investors looking to get into the markets in 2022. This is also food for thought for anyone that is concerned about their portfolio’s recent performance.

 

Conclusion

 

I’ve said it before and I will say it again: don’t panic.

 

Note: stock market investing is not for everyone. If you are uncomfortable with market volatility, other options such as property may be worth considering.

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