Merry Christmas from the Montgomery team!
Sentiment among investors has recovered slightly from the depressed state of June and late September. One can now describe sentiment as ‘indifferent. ’ Interest in the stock market seems now to be found only among professionals for whom it is their job to be interested. Among direct investors, there’s Christmas and the holidays to think about.
Fewer periods have been worse for market returns than the last twelve months. Without a doubt, 2022 has been a tough year for equity investors.
The zero-interest-rate time is indeed over, and that realisation along with four decade-high inflation and bond markets pricing-in further rate rises have resulted in investors abandoning equities, and particularly growth stocks.
But this could prove to be a mistake. Next year could be a very good one for investors.
My review of the distribution of annual returns for the S&P500, over the last 150 years, revealed the two best return years were 1933 and 1954, when the market rallied more than 50 per cent. Meanwhile, the worst three years were 1931, when the market fell by more the 40 per cent and 1937 and 2008, when the market fell by between 30 and 40 per cent.
If history rhymes, next year or the year after could be a very good one. Nobody can successfully predict what next year’s return will be. History, however, suggests with each negative year, the odds of a better subsequent year improve.
The Montgomery team will all be taking a break from blogging over the Christmas and new year period, we will be back in 16 January 2023 with new insights and ideas.
From all of the team here at Montgomery we sincerely hope Christmas delivers the blessing of peace and safety for you and your family and we hope the new year delivers you and your loved ones immeasurable joy.
If you would like to catch up on some holiday reading, you can re-visit our top ten articles from 2022 via the links below:
Are we there yet? What to do when the bottom of the market is unknown
Why this market downturn is a great time to invest
It’s time to take advantage of share price falls
Three timeless lessons for long-term investing
Price and Value are two different things – just ask Canva investors
Dirty little thing called growth and why I think Symbio is good value
Earnings growth is becoming a priority
The stocks set to fly as travel takes off again
A closer look at REA Group’s half year results
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Sam
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Merry Xmas Roger, David and the Montgomery Team.
Thank you for sharing all your interesting and valued insights throughout the year.
All the best for 2023.