2022 finished with a low volume whimper. An expensive year for passive buy-and-hold investors, who suffered capital losses of -8%, -19% or -33% (ouch!!) if invested and held in the DowJones or S&P500 or Nasdaq Composite Indexes, respectively. The S&P500 Index decline was the largest since the 2008 housing crisis – and only 3 years since World War II have seen worse results.
Losses this extensive are literally life-changing events for investors, especially those seeking to retire or pay for their children’s educations. Imagine having slowly amassed a large comfortable sum only to have a third of it vanish in a single year.
Interesting though that the final week ended with a mini-rally – and in fact most of our 280 watchlist stocks rose on the week despite what the indexes posted (those losses being driven by continued declines in the “mega-cap” stocks which we do not track). Very few sell signals for this coming week but quite a few buys, which are being added to our list.
Although economic and political conditions remain dismal, this may be a sign of “smart money” deciding now is time to step in and snap up some bargains. The first week may give us some sign of whether institutions or amateur investors are in control of the market at the moment.
Although our cumulative results were also below our own average result for the year, they were still net positive, and if you traded some of our large decliners short or large gainers long it’s still possible you had a significant net gain for 2022. By trading each stock in the direction of its prevailing trend as measured by institutional investor behavior we continue to outperform passive investors – and will again in 2023 no matter which direction each stock trends.
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