Here’s to making the second half of the year better than the first
We all just need a do-over
Today marks the final trading day of the first half of the year — a six-month stretch I’d say most of us would take a mulligan on if given the opportunity.
It was the worst first half for the market since 1970. Yup, as of today the S&P 500 index has tumbled more than 21% since the first day of 2022.
I mean, looking back on what it’s endured since the year started, 21% almost seems reasonable.
Things could be a lot worse considering …
Investors have been crushed, especially those with substantial amounts of money piled into the high-multiple, negative cashflow companies that surged to ridiculous valuations during the pandemic. Some of those stay-at-home plays have cratered more than 80%.
I mean, have you looked at a Peloton chart recently? That one, the king of all pandemic plays, is down more than 90% this year. It’s crazy to think a stock trading above $160 at one point is now below $10. Crazier still: That’s all in the span of a little more than a year. Probably closer to a year and a half, but you get the point.
I’d argue there’s money to be made buying Peloton at these levels, but that offers little to console anyone who bought around the highs. Peloton could resurrect itself and go on to become the primer connected-fitness company in the world and still never come close to a share price in the $160 range.
Young investors who stumbled into the market during lockdowns have likely stumbled right back out of them by now.
I remember when the first year of the pandemic ended.
The future was unknown, but everyone was just so relieved the year was over. We were turning the page on one of the strangest, scariest, and unfortunately for many, saddest stretches of our lives.
Then, somewhat predictably I’d say looking back on it, 2021 turned out to be just as intolerable. Just as mentally draining, just as frustrating, just as uncomfortable.
2022 rolls around and, well, as I mentioned at the start of this post, it’s been a literal series of unfortunate events. One thing, then another, and another. The world is like a busted pipe spewing nonsense everywhere.
The good news is the market has most of that nonsense priced in. That said, a lot of what happens to our portfolios over the back half of the year is dependent on what happens with inflation and the war in Ukraine.
The sooner we can get some sort of clarity in terms of the timing of peak inflation, the better. Have we already had it? There are some promising signs with the housing market cooling off, but only time will tell.
From there, the question will be what sort of a recession we’re going to be looking at. Tech companies have already started layoffs. There will be more to come, but how many more? Hopefully, we can slip into one of those soft landings all the talking heads on CNBC keep talking about.
Then there’s Ukraine.
The people of Ukraine have shown tremendous resilience throughout what can only be described as a blatant and unprovoked invasion by Russian intruders. It’s been inspiring.
How to donate to relief efforts in Ukraine
As bad as it’s been, it could take a turn for the worse if the Russians continue to dig in. Putin isn’t going to like the new upgrade to NATO with the additions of Finland and Sweden. President Biden just announced the U.S. is boosting its military presence in Europe as well.
The war will continue to be a dark cloud, not just over the stock market, but lingering ominously over the entire world.
Until it isn’t.
The market won’t drop a ton on play-by-play, but could move significantly in either direction if anything material happens. Obviously, some sort of resolution would be great for the market.
Things could, of course, go the other way. If an emboldened Russia starts to inch closer to its stated goal and sets its sights on an allied European country, things could get quite dicey, to say the least.
I think I speak for the world (including some of Russia) when I say I’m hoping Ukraine rids itself of its invaders ASAP. It would be good for the market, but, more importantly, it would be incredible for the people of Ukraine.
Most of us can’t do much about either of the major market-moving stories of the second half, but we can help the people in our own lives in all kinds of ways. If you can’t think of anything, just be kind. Be kind to everyone you cross paths with. As hard as the last few years have been on you, remember they’ve been hard on everyone you interact with, too. We’re all in this together.
Our investments will do much better in a safe, secure, and inclusive world than in an unstable, angry, exclusive one. We’ll do better as people, too.
Now, I’m going to end this post the same way I started it …
Here’s to making the second half of the year better than the first.
Disclaimer: I’m a market participant, not a financial advisor. This is not financial advice.
