By Haddon Libby

U.S. stocks were down by nearly 20% in 2022.  This comes on the heels of a 25% increase in 2021 along with a 20% increase during a tumultuous 2020.

When looking at your year-end statements, see if you can diagnose what did better and what did worse.  To do this, you will need a benchmark to compare your performance against.

For your reference, I own and operate a State-Registered Investment Advisory firm.  RIAs must put their clients first in everything that we do, or we can get in serious trouble.  For comparison, brokers by definition are middlemen who are allowed to put compensation for themselves and their firm ahead of your best interests.  If they do this in egregious ways, they can get in trouble although I have seen some get away with things that you or I would consider shameful.


If you can find an RIA firm that performs to the Fiduciary Standard of Care, well you have found the unicorn of investment advisors.  These folks must put your interest first in everything that they do, or they get in trouble.  As a shameless plug, I operate to this standard of care.

Soft pitch aside, let’s review how you have done with your investments.

Given the returns seen in the market in 2020 and 2021, general shortage of workers and low cost to borrow money, is it any wonder that inflation took off?  Add to that higher energy costs thanks to the Russian invasion and supply shortages caused by zero COVID policies in China and you can see why the Federal Reserve has been so intent on beating back inflation now.  As older readers know from experience, inflation erodes the ability to buy things whether it be food, fuel or a McDonald’s Value Meal.

Are you an aggressive investor who invests in Growth stocks like Tech?  A younger investor would typically be the most aggressive as they have the longest time to recover from nasty selloffs.  Growth stocks which were up 44% in 2020 and 25% in 2021 fell the most – down 37%.

Let’s say that you are not that aggressive.  You keep your money invested in stocks but a healthy mix that would be described as a mix of growth stocks and value stocks.  Where technology is typically a growthier industry, banks, oil companies and utilities are typically value-oriented.  Growth is slower but you get a dividend while you wait.  As mentioned earlier, this approach was up 20-25% in the two years before the 20% drop in 2022.  Over the last five years, you should have been up by about 8.5%.

Let’s say that you are more cautious and keep half of your money in stocks and half in bonds.  This more conservative approach resulted in returns of 13.7% in 2020, 13% in 2021, and a 15% decline in 2022.  This approach should have resulted in about a 5% return over the last five years.  Those who used bond funds were unfortunate enough to experience the worst decline in valuations in history.  Those holding the individual bonds were left with returns far behind inflation.

While the stock market may very well go down while the Federal Reserve hikes rates and money is sucked out of the economy to beat back inflation, a long-term investor who has decades until retirement should view this market as one where they can be more aggressive and buy stocks at a discount.

Older investors do not have this same luxury of time.  The good news is fixed income investments pay the best returns in 20 years.  Money markets pay 4% while US Treasury bills yield as much as 4.7% for one year.  The trick here is to keep maturities short as rates paid go down as you more toward longer term issuances.

Hope this helps!  By the way, this is not investment advice.  If you want investment advice, you can reach me via

Haddon Libby is the Founder and Chief Investment Officer of Winslow Drake Investment Management.