“2022 was a timely reminder that volatility is a trait of financial markets, not a flaw,” said Scott Clemons, chief investment strategist at BBH. “We have enjoyed upside volatility from 2020 to 2021, and 2022 has reminded us that what goes up will occasionally go down.”
But Thanksgiving should be a happy time, so how about we take a look at some of the bright spots in the market this year?
There’s a saying on Wall Street that there’s always a bull market somewhere. This also applies to this year. Oil stocks have been big winners this year thanks to the rise in crude oil prices… boosting sales and earnings.
Additionally, many big oil companies have rewarded investors with higher dividends, as fund manager Janus Henderson noted in a recent report: “Rising energy prices led to a significant increase in dividends…as oil companies paid record profits to shareholders,” the company wrote.
Janus Henderson said total dividend payments for energy stocks rose 7% in the third quarter to nearly $416 billion … and 90% of oil companies either increased their dividends or held them steady, with some energy companies opting to pay one-off special dividends to have .
Of course, dividend stocks haven’t been the only way for investors to make more money this year. The bond market was a lucrative source of income as rising US and global interest rates pushed yields higher.
Buy bonds and short stocks?
“Investors can get carried away by the excitement of the stock market, but now is the time to look at the bond market,” said Brian Overby, Ally’s senior markets strategist, in a report. He noted that investment-grade fixed-rate corporate bond yields are above 5.5%, not far from their highest levels since 2009.
Overby added that short-dated US Treasuries offer good value with yields above 4%. And there are also opportunities for investors looking for a little more risk…and potential return.
“Volatile parts of the bond market, such as Bonds, such as US speculative fixed-rate bonds and emerging market bonds, are posting returns in the high single digits,” Overby wrote.
Finally investors who have bet versus The stock market can also thank you for this year’s volatility. … owe a lot?
Short sellers who borrow shares and sell them in hopes of buying back the shares at a lower price and profiting from the difference when they return them to the lender have much to be grateful for.
“Shorting crypto stocks has been a profitable business in 2022, with short sellers up nearly 90% this year,” said Ihor Dusanivsky, managing director of predictive analytics at S3 Partners, a research firm.
Technical results on deck
It’s not just crypto that’s having a tough year. The entire tech sector is underperforming and investors will be looking for signs that 2023 is getting better as multiple tech companies report earnings this week with shortened bank holidays. (Wall Street is closed on Thursdays for Thanksgiving, and Black Friday has a shortened trading day.)
So it’ll be interesting to see if Dell and HP benefit from the same back-to-work trend that’s hurting Zoom. Their current quarters aren’t expected to be strong, but their outlook could be key to what’s next for the market.
Analysts are forecasting a year-over-year decline in sales and earnings for both companies. Dell and HP stocks are each down more than 20% this year.
Thursday: US markets are closed for Thanksgiving
Friday: US Stock Market Closes at 1:00 PM ET on Black Friday; Japan CPI