Q3 2022 Market Review

The difficult year for the markets continued in Q3. One of the most challenging aspects of this bear market is that rising interest rates are pushing bond prices down while stocks are also retreating. Stocks in the US were down 4.46%, International stocks were down 9.2% and Emerging Markets were down 11.57%. In a rare occurrence, US bonds were down more than US stocks, with a dip of 4.75%, and global bonds were down 2.21%.

For a detailed Market Overview, click here.

When will the bear market end? Of course, nobody knows the answer to this question but a look at past bear markets gives us a sense of potential outcomes. The average bear market (drop of 20% or more) for the S&P 500 has lasted for 289 days. This bear market began on January 3rd of this year, so we are coming up on the average timeline at this point. Of course, some bear markets have been much shorter, and some have lasted much longer. There are many factors that impact the stock market; however, inflation seems to be the main driver this time around. If inflation eases up and we see positive signs then I believe there is a good chance we are closer to the end than the beginning, however, if inflation stays elevated it could prove to be a while before we reach the bottom. Nevertheless, one thing that history has told us is that every bear market does come to an end at some point and those who have stuck around for the recovery rather than locking in losses have been rewarded for their patience. For example, the average 1-year return in the S&P 500 following a 25% drawdown (which we just crossed) is 27% (again, with a wide range of outcomes).

 If you have specific questions on your investment strategy, feel free to reach out at advisor@blakegallion.com.