What’s falling in 2022? Nearly everything
2020: Everything goes up.
2022: Everything goes down.
…Except for commodities or big-dividend stocks.
What’s the big deal? In recent weeks, companies that reported worse-than-expected earnings were met with cratering stock prices:
- Upstart (NASDAQ:UPST) — the AI lending platform — fell 56% after reducing its full-year sales outlook from $1.4B to $1.25B (an 11% reduction).
- Palantir (NYSE:PLTR) fell 20% after reducing its sales outlook, implying slower growth ahead.
Of the ~500 tech stocks covered by tech analyst Tiernan Ray, over 53% have lost over half their value from their 52-week highs.
But the wreckage isn’t only limited to tech stocks. Under Armour (NYSE:UA) fell 26% this week, and Party City (NYSE:PRTY) fell 61% after missing earnings.
New market state: It’s difficult to say whether an 11% reduction deserves a 60% price reduction — but such a report likely wouldn’t have seen such a reaction last year.
- Per Bloomberg, missed earnings would typically lead to modest stock price drops. Today, companies are met with massive cuts.
- Even companies like Airbnb and AMC that had beat expectations — fell after reporting earnings.
Looking forward: If you’re lost, just know that you’re not alone. Market opinions are all over the place — fluctuating daily.
“Barely anyone has any conviction about what comes next,” says Adam Crisafulli of Vital Knowledge (BBG). The current market is anything but ordinary. Here are two tips to help you survive a recession:
1/ Prioritize capital preservation instead of chasing returns — and avoid investing in riskier assets to make up for losses.
2/ Diversify, diversify, diversify. Make sure your portfolio has a mix of assets that perform in various market environments.