2022 Investment Commentary

Many investors are no doubt glad to see 2022 in the rear view mirror, and if they do look back, the picture is not pretty.  Stocks were buffeted by the Federal Reserve Board’s aggressive rate hikes (the fastest since the 1980s stagflation era) and the reverse of the QE policies which, for a decade or more, flooded the markets with liquidity.  It didn’t help that there were persistent fears of a recession all through the last 12 months, and a certain level of alarm over the Russia-Ukraine war.  2022 saw the three main stock indexes post their first yearly drop since 2018, and market economists with long memories were comparing this perfect storm of headwinds to the declines triggered by the 2008 financial crisis.

A breakdown shows that just about every U.S. investment asset was showing double-digit declines.  The Wilshire 5000 Total Market Index—the broadest measure of U.S. stocks—gained 7.10% in the 4th quarter, but ended the year with a 19.04% loss.  The comparable Russell 3000 index was down 19.21% for the year. 

Looking at large cap stocks, the Wilshire U.S. 2500 Large Cap index was up 7.12% in the fourth quarter, but still posted a 19.00% loss for 2022.  The Russell 1000 large-cap index finished the year with a similar 19.13% loss, while the widely-quoted S&P 500 index of large company stocks gained 7.08% during the year’s final quarter and overall finished down 19.44% in calendar 2022.  

Meanwhile, the Russell Midcap Index finished the 2022 calendar year down 17.32%.

As measured by the Wilshire U.S. Small-Cap index, investors in smaller companies received a 7.77% gain for the last quarter, but were still down 17.50% for the year.  The comparable Russell 2000 Small-Cap Index posted a 20.44% loss in the past 12 months.  The technology-heavy Nasdaq Composite Index was the biggest loser in 2022, dropping 28.27% of its value over the last 12 months.

 

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