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Staying Positive in a Sea of Stock Market Malaise

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Outside of the Energy Sector, this has not been a good year for individual investors, yet. This past month, April 2022, was the worst April in 52 years. To make matters more complicated, investors cannot run to bonds for safety because the rising inflation and interest rates are depressing these markets too. The Nasdaq dropped 16.3% just in April and the S&P Index dropped close to 9% in April as well.  Did I also mention that there is a war going on in Europe and most of the headline news is very negative?

So, what’s going on and when will the markets turn positive so they become fun again?

First off, today is a buyers’ market. 

This means that equities (stocks) are on sale and represent a great buying opportunity. We believe this and have repositioned portfolios to take advantage of this cycler timing. The flip side, however, of a buying opportunity is the pain of watching your portfolio drop weekly. 

Good thing we, as investors, are in the equity world for the long term and long run.  When the markets turn around – and they will– we will be in a position to take advantage of these opportunities, as we did when Covid first scared us to death and shut down the economy.  Now, what worked in the past does not mean that this will work in the future. Despite this, we don’t want to scrap the U.S. Technology Sector just yet. 

Quality profits, quality companies, and those with great cash flow will be the leaders of the future. 

Next, let’s take a quick look at some of the previous winning companies through the end of April. 

They have lost their momentum compared with their high of 2021. You can see why your portfolio is probably down, and why we think this could be a great time to buy great companies. Keep in mind that I don’t include all of these in my future buys.

     Amazon                                                          -34%
     Google                                                            -23%
     Netflix                                                             -72%
     Facebook (Meta)                                          -39%
     Disney                                                            -40%
     Boeing                                                            -35%
     Tesla                                                               -29%
     Alibaba                                                           -68%

Lastly, the key to being a quality investor today is “patience.” 

The markets will probably not improve until the news coming out of Europe is positive, we can fill the backlog supply of goods, and there is improvement in the supply chain jam. Additionally, it probably will not improve until China opens its ports again (I wish we weren’t so dependent on supplies from China,) until we get our energy act together, and until we have positive consumer sentiment again. 

Patience is your friend. Impatience will make you sell into a down market rather than buy or wait it out. 

I heard the rumor this morning that Warren Buffet is quietly buying equities of great American companies. I happen to agree with this philosophy, buying when the masses are selling. We call this “Contrarian Investing”. 

At Prosperity Financial Group, we are watching the markets and your portfolio model every day. 

We feel the pain of the 2022 bleed. Even so, we are confident that with the good, tactical moves we have implemented, our clients will be in a positive position to achieve the quality results they have come to expect.

Expert Insights

Elliot Kallen Signature 5

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