June 8, 2022

Staying Invested Despite the Negative News

By Vance Albitz, CFP®

Investors have been running away from risk assets this year due to a number of factors, including persistently high inflation, slowing economic growth, the war in Ukraine, supply shocks from China and most importantly, the prospect of interest rate hikes from central banks looking to bring down consumer price increases.

The headlines and headwinds across the board have been exceedingly negative in 2022. Whether the headline comes from social media, a news station, or the newspaper, negative news is all around us. But how new is all this negativity – and are investors now more nervous than in years past? Recently, I heard a friend say: “Look around. Look at all the terrible things going on in our world. Why would you invest in the stock market now?”

From a logical standpoint, he makes a good point. Investing new money in the stock market now or simply remaining invested in the stock market may have risks. However, there are always reasons not to invest. Let’s look at some of the main negative headlines over the past 80 years and compare them to the annual % change of the S&P500 index on a year-to-year basis.

Year Reasons Not to Invest Annual % Change
2022 Russia-Ukraine, High inflation, High oil prices ?
2021 Inflation surges around the world 26.89%
2020 COVID-19 pandemic 16.26%
2019 Global rate cuts 28.88%
2018 U.S. – China trade war -6.24%
2017 Hurricanes hit U.S. and Caribbean 19.42%
2016 Wave of populism affect global elections 9.54%
2015 Greek debt crisis -0.73%
2014 U.S. drawn into Syrian conflict 11.39%
2013 5th year of government quantitative easing 29.60%
2012 U.S. faces “fiscal cliff” 13.41%
2011 European sovereign debt crisis 0.00%
2010 Gulf of Mexico oil spill 12.78%
2009 U.S. unemployment hits 10% 23.45%
2008 U.S. Recession -38.49%
2007 Subprime credit crisis 3.53%
2006 Dow Jones hits new high of 12,000 13.62%
2005 Hurricane Katrina 3.00%
2004 Oil prices soar 8.99%
2003 U.S. invades Iraq 26.38%
2002 Corporate accounting scandals -23.37%
2001 9/11 terrorist attacks -13.04%
2000 Internet bubble bursts -10.14%
1999 Fears of Y2K 19.53%
1998 Global economic turmoil 26.67%
1997 Chaos in Asian markets 31.01%
1996 Technology stocks crash 20.26%
1995 Dow tops 5,000 – market “too high” 34.11%
1994 Fed raises interest rates six times -1.54%
1993 Midwestern U.S. floods 7.06%
1992 Los Angeles riots 4.46%
1991 Recession 26.31%
1990 Iraq invades Kuwait -6.56%
1989 High-yield bond meltdown 27.25%
1988 Bank failures peak 12.40%
1987 Stock Market Crash of 1987 – “Black Monday” 2.03%
1986 U.S. bombs Libya 14.62%
1985 U.S. becomes world’s largest debtor country 26.33%
1984 Iran-Iraq war escalates 1.40%
1983 Soviets shoot down Korean airliner 17.27%
1982 Worst recession in 40 years 14.76%
1981 Reagan assassination -9.73%
1980 Abscam reveals U.S. political corruption 25.77%
1979 Three Mile Island nuclear plant meltdown 12.31%
1978 Cambodia Massacres 1.06%
1977 Energy crisis -11.50%
1976 New York City potential bankruptcy 19.15%
1975 U.S. withdraws from Vietnam 31.55%
1974 Richard Nixon resigns -29.72%
1973 Oil embargo -17.37%
1972 Watergate scandal 15.63%
1971 FDR takes U.S. off gold standard 10.79%
1970 U.S. invades Cambodia 0.10%
1969 Interest rate spike causes recession -11.36%
1968 North Korea captures USS Pueblo 7.66%
1967 Newark riots 20.09%
1966 Vietnam War -13.09%
1965 Civil rights marches 9.06%
1964 Gulf of Tonkin 12.97%
1963 JFK assassination 18.89%
1962 Cuban Missile Crisis -11.81%
1961 Berlin Wall is built 23.13%
1960 Soviets down U-2 airplane -2.97%
1959 Castro seizes power in Cuba 8.48%
1958 Recession 38.06%
1957 Soviets launch Sputnik -14.31%
1956 Suez Crisis 2.62%
1955 Eisenhower illness 26.40%
1954 Dow tops 300 – market “too high” 45.02%
1953 Soviets detonate H-bomb -6.62%
1952 U.S. seizes steel mills 11.78%
1951 Excess profits tax 16.46%
1950 Korean War 21.78%
1949 Soviets detonate A-bomb 10.26%
1948 Berlin blockade -0.65%
1947 Cold War begins 0.00%
1946 Dow tops 200 – market “too high” -11.87%
1945 Post-war recession predicted 30.72%
1944 Consumer goods shortages 13.80%
1943 Industry mobilizes 19.45%
1942 Wartime price controls 12.43%
1941 Pearl Harbor -17.86%

What will the remainder of 2022 bring? Though nobody knows, history suggests the stock market is likely to be resilient and reward long-term investors over time. Staying the course, rebalancing, adjusting allocations, and continuing to look for opportunities in the marketplace are all strategies we are focusing on.

The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors should consider their financial ability to continue to purchase through periods of low price levels.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.