Christmas might be just around the corner, but not sure what happened to summer?! This year could be the first year in Australia, we experience a ‘white Christmas’ with snow falls on Mt Buller a mere 40-50 kms from here just this week… crazy!
With the year coming to an end, it’s a great time for the Christmas parties to celebrate and reflect on the year that was, and while I am not into ‘New Years Resolutions’ it is a perfect time to sit down and plan out the year to come.
So, in that vein, with just 2 newsletters to go before Christmas, I thought I would do a ‘Year in Review’ and then next week, look out for our 2023 Outlook.
2022 – A Year in Review
If there was one word to sum up 2022 it would have to be – volatility.
From very strong growth coming out of ’21, through to rising interest rates and slowing markets in the back half of the year, it was certainly hard to predict what was coming next. Crypto crashing, stock market volatility, exchange rates wildly swinging, it was certainly an unsettled period in most markets.
Inflation has the be one of the key drivers for the year. After the wind back of the quantitative easing policies of most western governments (read money printing) one inevitable outcome was going to be inflation. Now strangely enough, it was not as much about demand driven inflation (higher prices caused by high demand for items) but more about supply chain shortages and simply manufacturers not being able to keen up with the normal demand level. Primarily though, still a hangover of the pandemic issues.
Then, to try and curb the huge inflation rises seen in the economies, the central banks started on one of the most aggressive interest rate strategies that we have seen in recent times, both here in AU and in the U.S. Four consecutive three-quarter-point rises in the U.S. (7 in total for the year) was capped off by a 0.5% rise this month (December) bringing their central cash rate to around 4.25% now at the end of 2022. Here in Oz, the RBA didn’t want to miss out on all the fun either and moved into a period of 8 consecutive interest rate hikes for 2022 – from 0.1% in April to 3.1% now in December.
It’s no wonder why some investors just didn’t know which way to turn. Careful property investors here in Australia who managed to secure a positively yielding property, are now seeing negative yields; crypto investors seeing their net worth plummet; stocks and shares are more of a roller coaster than an investment…
All very unsettling.
And that’s before we even mention floods in Australia; our third consecutive La Nina event causing weather havoc all down the eastern seaboard; war in northern Europe – it just didn’t stop.
Certainly cannot blame people for limping across the finish line of the year, collapsing into the chair of NYE with beer or wine in hand, hoping that 2023 will bring normality or stability…
And while I am not trying to paint a negative picture of the year that was, just stating facts, it has also been a year of opportunity. I believe what we have seen is just the markets trying to get back to some form of normality, after being twisted out of shape by the government responses to a global pandemic, and in trying to get back to ‘normal’ we have seen some wild swings along the way.
For those investors that held on through the bull ride, there have been some amazing opportunities this year and within volatility there is always opportunity. As a good currency or stock market trader will tell you, the volatility in a market (or measure of how wildly prices go up and down) is often seen as a good thing and can give the best opportunity for profit, much more so than stable, flat markets.
I think the adage of the year (maybe the past few) is – “That which does not kill you makes you stronger.”
While not an easy year for investors, certainly an opportunistic one if you were willing to brave the waves.
Next week, lets take a look at 2023 and see what might be to come, and how best to tackle our next 12 months.
https://www.stardynamic.com.au/wp-content/uploads/2022/12/pexels-towfiqu-barbhuiya-9036980-scaled.jpg17072560Lindsay Stewarthttps://www.stardynamic.com.au/wp-content/uploads/2018/08/StarDynamicPropertyInvestments_sd4final-1030x352.pngLindsay Stewart2022-12-16 01:02:052024-01-29 13:32:412022 – A Year in Review