Weekly Update: July 5: Click here to read 3 reasons why we have reasons to remain optimistic as we enter the second-half of the year!

Posted on August 4, 2022
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By Debra Taylor, CPA/PFS, JD, CDFA™

 

ear Friends,
Summer is finally here, but 2022 is still shaping up to be one of the worst years for investors ever. That’s the bad news. The good news is, the year isn’t over and we have several reasons why we believe the bulls shouldn’t throw in the towel just yet.
Here are three reasons why investors should remain optimistic as we enter the second half of 2022.
1) Bad Starts to A Year at Halftime Don’t Always Mean More Trouble
The S&P 500 Index is down 21% for the year, which would be the worst first-half of any year since 1970. As bad as that has been for investors, the good news is previous years that were down at least 15% at the midway point of the year saw the final six months higher every single time, with an average return of nearly 24%.
As the table shows below, big drops to start a year tend to see big bounces back. Although most investors probably don’t feel like that is possible in 2022, just remember history says a surprise bullish move is possible.

2) Horrible Quarters Are Often Followed by Smiling Bulls
Next, a horrible quarter tends to see a nice rebound. Looking at previous quarters, when down at least 15%, the next two-quarter stocks were higher 7 out of 7 times, with an average return of more than 17%. Things get even better when looking at the full-year return, being up nearly 30% on average. That is something most investors aren’t expecting right now, but we are guessing they’ll be quite happy should history repeat itself.
3) Back-to-Back Weekly Drops Aren’t Fun, But Could Be a Good Sign
Lastly, the S&P 500 fell more than 5% in back-to-back weeks in June, another potentially bullish development. In fact, after previous times the S&P 500 fell that much, a year later it was up more than 28% on average and down only once (1987.)
Presently, there are numerous reasons to remain optimistic about having a really good second half of the year. Although the market has not been easy on us thus far, we continue to stay patient, follow the process, and focus on our client’s long-term goals.
Please reach out with any questions.
Debbie
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