Bye 2022. You wont be missed!
Coming on top of a historic rally in 2021, we had big hopes for you 2022, but needless to say, you turned out to be one of the craziest years for investors. From spectacular fails like the crypto crash, tech layoffs, inflation and war, I am happy to say goodbye to 2022 and wish it never comes back!
The year started on a high with a 10% rally in the first couple weeks of January, but just like that rally, things just turned crazy from there. The volatility just kept on coming! Every time we thought the worst was behind us – a new source of volatility would come in.
Here’s looking back at some of the most spectacular events of 2022 in no chronological order – and obviously with the help of some memes.
The murmurs of Russia’s annexation attempt on Ukraine started in January. We thought it was just a fluke until February 24th, when Vladimir Putin invaded the country. The war still rages on and has taken countless casualties. Moreover, the impact on the global economy – from the energy crisis in Europe to global commodity inflation – has been quite adverse.
Inflation was the theme of 2022. All major global economies, including India, saw inflation rise to historic levels in 2022. The United States, with target inflation of under 2%, saw the inflation numbers touch 9.1% before starting to cool off. The war, reckless pandemic spending, and supply shocks were the reasons for the sky-high prices. As a result, we looked at inflation numbers more than ever in our lives, and the high inflation bought the rate hikes, which is another story in itself.
Tech Meltdown and Elon Musk
Big tech had a big meltdown in 2022. Everyone from semiconductors to social media to the cloud has cut down future projections, delivered abysmal growth, and seen the prices tank. Mark Zuckerberg invested in the metaverse, and the Meta stock tanked by 70%. Apple and Microsoft are still relatively robust at 20% downside. Still, the layoffs in big tech have destroyed all confidence in the industry. Elon Musk’s Tesla is down almost 70% with no end in sight, but that did not stop him from creating daily chaos with his Twitter takeover.
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Rate Hikes & Recession
The US rates went from 0.5% to 4.5% in 2022. The Indian rates went from 4% to 6.5%. The rates seen in the US are the highest that we have seen since 2008 and have been a huge source of volatility for the Indian market. Over the past few months, we have had a repeated nightmare of rising inflation, FED hiking interest rates, RBI hiking rates, and stock prices crashing, rinse and repeat! With inflation coming under control, the central banks are still not done. The hawkish tones continue into 2023, even though we are already seeing a negative impact on growth.
Crypto crash and FTX Bankruptcy
The crypto economy and the monkey NFTs have had the worst year in 2022. Bitcoin is down 70% for the year, and people are losing faith in the digital assets born out of pandemic cheques which were supposed to solve everything. Adding fuel on fire, one of the largest crypto exchanges, FTX, filed for bankruptcy, wiping out the entire $16 billion fortune of former FTX co-founder Sam Bankman-Fried and landing him in jail. The fraud levels were beyond any other that we have seen, and I am just waiting for the Netflix documentary.
As 2022 comes to a close, most of the world still faces stubbornly high inflation, aggressive interest-rate hikes and geopolitical tensions. But the market already has some exciting themes emerging that can bring a lot of colour to our portfolios.
Here’s to the hope that even with the recessionary fears and the fresh scare of coronavirus from China, 2023 surprises us with some positivity, and we say goodbye to the craziness of 2022 for good!