In 2022, Investors Have Little to Be Thankful for


City of New York — The Americans are getting ready for Thanksgiving. But investors in the US and around the world don’t have much to be thankful for in 2022, which is shaping up to be a bad year.

This year, the S&P 500 is down 17%, and the tech-heavy Nasdaq is down almost 30%. Cryptocurrencies have lost a lot of value. Some meme stocks, like AMC (AMC) and Bed Bath & Beyond (BBBY), have gone bankrupt. There are signs of stress in the housing market. There isn’t much to be happy about in the market and economy right now.

Scott Clemons, BBH’s chief investment strategist, said that the year 2022 was a good reminder that volatility is not a flaw. “We had some ups and downs from 2020 to 2021, and 2022 reminded us that what goes up must sometimes come down.”

But since Thanksgiving should be a happy time, let’s take a look at some bright spots in the market this year.

It is said that there is always a bull market somewhere on Wall Street. This year is no different. This year, oil stocks have done very well because oil prices have gone up, which has led to more sales and earnings.

The value of the S&P Energy Select SPDR ETF (XLE) has gone up by about 65%. This year, Occidental Petroleum (OXY), which is backed by Warren Buffett and Berkshire Hathaway (BRKB), has more than doubled and is now the top stock in the S&P 500. The best stock on the Dow is Chevron (CVX), which is up about 55%.

In 2022, Investors Have Little to Be Thankful for

Also, many of the biggest oil companies have raised their dividends. A recent report from the money management firm Janus Henderson said, “Soaring energy prices led to a large increase in dividends…as oil companies gave shareholders record earnings.”

Janus Henderson says that the total dividends paid out by energy stocks rose by 7% in the third quarter, to nearly $416 billion. About 90% of oil companies either raised their payouts or kept them the same, while the rest chose to pay one-time special dividends.

This could make lawmakers who want to tax the extra money oil companies make even more worried. For the time being, investors in energy are making money.

Companies that pay dividends aren’t the only way investors have been able to make extra money this year, though. Bond yields have gone up because interest rates have gone up in the U.S. and around the world. This makes the bond market a good way to make money.

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Buy Bonds and Short Stocks?

Brian Overby of Ally said, “Investors can get caught up in the stock market, but now is a good time to look at bonds.” The rates on investment-grade corporate fixed bonds are above 5%, which is close to their highest level since 2009.

Overby said that the yields on short-term US Treasuries are more than 4%. There are also chances for investors who take more risks. Overby pointed out that the yields on a speculative-grade fixed income in the U.S. and emerging market debt are both in the high single digits.

Investors who bet against the stock market in 2018 can also point to the market’s volatility. Short sellers, who borrow stocks to sell and return them at a lower price, have a lot to be thankful for.

Shorting is a risky strategy that is not for the faint of heart. ETFs make it easier for regular investors to bet against the market, and so far this year, they’ve done well. PSQ shorts the Nasdaq 100, while SH shorts the S&P 500. Both are up 15% in 2022.

Even more, money was made by bearish investors who sold short crypto-related stocks in 2022, especially after FTX went down. Ihor Dusaniwsky, who is the managing director of predictive analytics at S3 Partners, said that it has been profitable to short crypto stocks in 2022.

In 2022, Investors Have Little to Be Thankful for

Dusaniwsky pointed out that short sellers of cryptocurrencies made almost 10% just in November by focusing on Square-owner Block (SQ) and Coinbase. This year, shares of former Twitter CEO Jack Dorsey’s company Block (SQ) are down 60%, while shares of Coinbase are down 80%.

Tech Outcomes Are on the Way

Not only crypto is having a hard time. When tech companies report their earnings this week, which is short because of the holidays, investors will be looking for signs that 2023 will be better. Wall Street is closed on Thanksgiving, and on Black Friday, there is less business.

Zoom (ZM) says that on Monday. Analysts think that profits will go down and sales will go up by 5% from last year. As more people went back to work in 2020, the company’s boom at the start of the epidemic has come to an end. The stock has dropped 55% this year.

This week, Dell and HP report their earnings. Desktops and notebooks aren’t as popular with consumers as they were before smartphones and tablets, but both companies still make a lot of money from corporate customers.

It will be interesting to see if Dell and HP do better than Zoom because of the same back-to-work trend that hurts Zoom. People don’t think their current quarters are good, but their outlooks could change the way the market moves.

Analysts think that both firms’ sales and profits will be lower than they were last year. This year, both Dell and HP are down 20%.

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