Yearend Review for 2022 – December 30, 2022
2022 is in the books. It was a memorable one for investors!
Today I’ll go over some of our most viewed posts in our yearend review for 2022.
It’s always fun to look back. This year was all about the macro: rising rates, soaring commodity prices, war, oversold conditions, a strong dollar, lower valuations and more. Value sectors dominated in performance and our data.
MAPsignals put out a lot of great research to help navigate the challenging tides. We tackled many worries on investors’ minds and provided data-driven angles.
While we weren’t perfect, I can say that we did a respectable job in terms of performance and historical studies. I’m sure you’d agree there was a lot to cover in 2022!
Let’s now take a quick lap down memory lane at some of the bigger themes from this year.
Yearend Review for 2022
Without question, positioning and macro events dominated portfolios in 2022. Below are 14 of our most memorable insights from January through December.
Grab a coffee. I made a quick recap of each highlighted blog piece. Enjoy!
1) In January, Alec Young kicked off an enlightening piece titled, Don’t Fear the Fed, where he showed how stocks performed historically given the pace of rate hikes
2) Later that month, he asked a simple question: Which sectors perform well when rates rise? Energy, Financials, & Industrials fared the best. Notably, the energy group ranked highest all year in our data.
3) Then in February, Alec reminded us of the power of dividends in a long-term portfolio. Reinvesting dividends since 1994 resulted in 70% more money compared to total return alone. Yes, dividends make a big difference:
4) Next, in March I made the case that investors shouldn’t fear recessions. While sectors were under pressure, like Technology, history shows that years following a recession are green on average since 1980:
5) Then in May, the Big Money Index reached oversold conditions. All sectors except for energy were sold hard, indicating a reversion bounce should come soon:
6) Fast forward to July and market internals were improving, setting the stage for a rally. Health Care, Financials, & Industrial stocks were under heavy accumulation:
7) Then in August our BMI reached overbought conditions (80%) for the first time since December 2020. That prefaced the signal to take profits once it fell below 75%:
8) August was a busy month as I laid out our midterm election playbook. Since 1990 in midterm election years, expect weak Septembers and strong Octobers & Novembers:
9) Then came September when the case was made to prepare for September volatility. The BMI broke below 75% and reached oversold that month:
10) Now on to October when many were worried over the dollar’s rise. Alec researched how stocks fare after the dollar peaks. Discretionary, Financials, and Health Care stocks jump the most 12 months post the dollar peaking:
11) Later that month a rare bullish signal triggered. Our data saw the weakest breadth reading since April of 2020. The forward 12- and 24-month returns post this signal have been green in all instances since 2012:
12) In November, I laid out our post midterm election stock market gameplan. Stocks and the BMI tend to rise in December and January. I made the case that we could be looking at a large rally into the year’s end. Unfortunately, that part of the roadmap didn’t go as planned. However, November – April in post midterm election years have been green in every instance since 1982:
13) Later in November I posted our Big Money Review for 2022. Even in one of the toughest bear markets in recent memory, MAPsignals top stocks beat the S&P 500 handily. Of the 88 stocks profiled, they averaged a +6% performance vs -2.6% for the market. I’m proud of that!
14) Lastly to round out 2022, Alec laid his macro outlook for 2023: Why stocks can be a good bet. He covered recession fears, inflation worries, the earnings apocalypse, and valuations in this awesome piece. As we head into a new year, keep in mind that recessions aren’t the end of the world.
Six months prior to a recession, stocks fare the worst with an average loss of -4.6%. In the six-month period after a recession, the S&P 500 vaults an average of 16.9%. That’s something to look forward to:
And that’s a great way to close the books on this unforgettable year – on a high note!
Here’s the bottom line: 2022 has come to a close. And I’m sure many are glad it’s over!
Investors witnessed plenty of tough conditions from a macro standpoint: high rates, elevated energy costs, wars, a strong dollar, and a bear market to name a few. Our Big Money Index reached oversold an incredible 4 times.
Even still, we found plenty of leading stocks and sectors for subscribers. While no one bats 1000, we look for opportunities in any market. We keep it simple: Just follow the flow of the money.
Author: Lucas Downey