Bears of '22 Still Here

Current position for Active portion of portfolio: SELL – S.T.A.Y. Plus™

Bear Market Continues into 2023
This last year's stock market was the worst performing since 2008. Further, 2022 saw the worst Bond price drop in one year, ever.  Bonds, which have traditionally served as the “safety net” for portfolios in down markets, were down over 27%* (*BLV, Vanguard Long Term Bond Index Fund). The safety “rule of thumb” implemented by age-targeted funds (over half of all 401k investments) was to hold the percentage of bonds in your portfolio that matches your age, so that the older you get, the safer your portfolio is (i.e. 60 years old, 60% bonds, 70 year old, 70% bonds, etc).  This rule of thumb has been extremely devastating to "buy and hold" portfolios this year, especially for the older investors. 

In addition, the Nasdaq was down -32%, followed by the S&P500 at -18%, followed by the Small Caps at -16%, followed by the Midcaps at -13%.  Making the average of the four equity indexes a -20.32% for the year.  This made any mixture of stocks and bonds in a “buy and hold” portfolio a very dangerous bet for 2022 and likely for 2023 as well.

There were roughly four bear market rallies of various sizes last year, each of the counter-trend rallies retraced about 50% to 61% of the previous decline. Although some of these rallies, like June-July and Oct-November, can be quite impressive, none of them broke the downtrend because we continue to have lower lows and lower highs all year long. The updated daily and weekly charts continue to illustrate this.  See below.

​Daily Chart of the S&P 500 (mid-April through last week)

S.T.A.Y. Plus™ - Balanced Portfolio Performance

Weekly Chart of the S&P 500 (Nov. '21 through last week)

S.T.A.Y. Plus™ - Aggressive Portfolio Performance

Also, of historical significance, we are continuing to see the pattern of 2007/2008 play out... click here to revisit the market quiz post with updated charts depicting this.