S&P 500 is down 20% since it topped out exactly a year ago on Jan 3, 2022. Usually with that kind of slooowwww decline it goes down at least 40% -- ala 49% decline from spring 2000 to fall of 2002 (2 and a half years) or 56% decline from fall of 2007 to March 2009 (1 and a half years).
If it goes down rapidly as in 30% in a few months -- ala 1987 and 2020 -- it has a tendency to bottom out at 30%-ish and rapidly go back up. But it took 9 months to go down 30% this time (January to October 2022), so I stayed out.
so I stayed out.
So did I mostly. The problem is inflation has over taken my gains last year...4% in short term treasuries verses the supposed 7-9% cpi increase. On the face it looks bad BUT 4% up is better than 20%, or more, down IMO!
The problem is I don’t see it improving soon. Looking at the firms that have huge capitalizations, they do not have revenues to support their size. PEs in the triple digits and dividends of near zero in many of the tech companies. Worse, as individuals retire and begin drawing down their 401s and with fewer workers buying into 401s, things look bleak to me especially with the FED trapped into raising rates to where they should have been to rein in the crazy deficit spending Congress and administration. Remember, cash, stocks, and other financial paper is exactly that, paper. A Fahrenheit 451 is coming.
The trouble is finding alternatives to stocks. Bonds did even worse than stocks. I expect real estate prices to crater this year.
We liquidated about half of our net worth in 2021 and parked it in mutual funds earning less than 1% interest. After inflation, those accounts are worth about 8% less than they were a year ago.