Time really flies doesn’t it? Well, unless things aren’t going the way we want them to or you are experiencing some kind of pain. When things don’t go well, time just drags on. Let’s say you train for a half marathon. It takes months of commitment to run that race in the time you hope to. Months of eating right, making sleep a priority, dealing with injuries, having good weeks of training and bad weeks of training, questioning your motivation, etc. Then the day of the race comes and it’s over in two hours. You’ve logged hundreds of miles, hopefully while listening to podcasts or music, dealing with soreness and pain, fatigue, stress, and the challenges of motivation only to be done in two hours. AND, to add insult to injury, you might not have had a good race. You might have set a goal of two hours and you end up at 2:05. Or, even worse, you may have gotten hurt and not finished the race.
On the flip side, if you crush the race and run a sub 2:00 you feel fantastic and all the training was worth it! You forget about the pain of training, stress, fatigue, motivational challenges, and all the other difficulties you faced along the way because you achieved glory! Investing is a very similar experience except as long as you stay the course, it works out!
Does anyone remember 2022? It was Joe Biden’s second year in office and inflation for January was 7.4% and on the rise. In February, Russia invaded Ukraine. Everyone was talking about a recession because the Fed was behind the curve and was late to change rates and they were forced to raise them. People were worried the housing market would collapse due to the impact of higher rates. Queen Elizabeth died, Trump’s home was searched, Musk bought Twitter, Roe vs. Wade was overturned, supply chains were in shambles, and reports came out that the government was pressuring social media to censor/remove major stories. Even writing this, it reminds me what a stressful year it was. 2022 seemed to drag on because it was bad news after bad news, and the stock market AND bond market had a brutal year. Worst year for bonds in anyone’s lifetime reading this.
I personally remember coming into the year excited and optimistic for the markets (I almost always do though, as I’m an optimist by nature) and the market then hit an all-time high on January 3rd! After that it didn’t go well. The Fed started raising rates in Q1 in response to inflation fears, Russia invaded Ukraine and then it didn’t go well… for a while. Sean and I are always bracing ourselves and our clients for a market downturn. We don’t know when they are coming (Except in hindsight), we just know they are coming. We also don’t know how bad they will be or how long they will last. Who would have thought after the stock market dropped 34% in 33 days during the beginning of Covid in 2020 that it would immediately turn around and have an almost two-year bull run! It’s hard to believe that was almost five years ago. Seems like ancient history now doesn’t it? Well, you know during that time it was a little scary and nerve-wracking.
One of our favorite charts at Resolute Wealth Management comes from JP Morgan. It shows how much the market declined from it's high point during the calendar year by the red dots, and the grey bars show the return of the market during that same calendar year. Here it is:
Lovely, isn’t it? So, getting back to 2022. It was a rough year. It dragged on and it seemed like every time the market was turning around it would drop more… and more… until it ended up bottoming out on October 12th down roughly 25%. Sean and I spent a lot of time on the phone and with clients assuring them the pain would at some point be over and the markets would recover. We didn’t know when it would end, only that it would end.
Well, for those that stayed invested and rode out the storm they are probably quite happy. Since January 3rd of 2022, and as of close of business on January 17th, 2025, the market is up 31.06% and over 9% annually. Again, this includes a 25% drop from January to October of 2022 in a year that ended down almost 19%! Most people have forgotten about it.
The reason I wanted to write about the pain of 2022 was that it was the 7th worst year for the stock market since 1926. The 3rd worst of this century. 2002 and 2008 dropped 22% and 36.6% respectively. People seem to remember those years more vividly than the one that just happened.
So here we are after enjoying 2023 and 2024. Both years claiming 20%+ gains in the market and they flew by! Gets back to my point that when things are a little rough, they seem to drag on and the pain never feels like it will end. If you stay in the game (Keep training) and get through it, the result is a wonderful experience. Remember, the pain is there to make the good times sweeter. Without it, the good times are no longer good times.
One way to avoid some of this pain is to not check your accounts so regularly. There was a time not too long ago where the only way to know how your investments were doing was to wait for a quarterly statement. Then you were either happy or sad about it and you had to wait a few more months to see it again. Something similar happened to me recently. I check the stock market probably 4-6 times each day to see how it’s doing. But, I rarely check my own account balances. In September of last year, I reviewed my financial plan. It had been about a year since I had looked things over. I was shocked at how much my account balances had grown. It was quite exciting. I knew the market was up and my client accounts were way up, but I’m more emotionally tied to my own accounts, and I was pumped when I reviewed them.
The whole point of this blog it to remind you that when things are tough, they feel like they drag on forever. You ask yourself, how low will my account drop? At what number will I sell everything and just go to cash? But, one day, the tough time will pass and the good times will roll. We just don’t know when. Keep in mind, we are here to help get you through the rough times as that is where we bring most of our value. Keeping you in the game.
We don’t know when the next big downturn will be, but one is coming! Just buckle up and get ready for the ride. It’s all part of the journey to bigger and better things.
Rory Hartmann, CFP®
Neither asset allocation nor diversification guarantee against investment loss. All investments and investment strategies involve risk, including loss of principal.
Content here is for illustrative and educational purposes only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.
This commentary reflects the personal opinions, viewpoints, and analyses of Resolute Wealth Management. It does not necessarily represent those of RFG Advisory, clients, or employees. This commentary should be regarded as a description of advisory services provided by Resolute Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.