Stock Market Outlook 2022: The Ultimate Guide for Your Portfolio

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It’s been a pretty rocky year for the global economy, and that’s not likely to change anytime soon. Fed tightening, wage pressures, and market conditions have all made for a roller coaster ride of buying the dip and taking profits.

Many investors would like to know when it will all settle down. In the larger sense, that’s anyone’s guess. There are simply too many unknowns to pin down exactly what’s going to happen. However, there are always opportunities for solid buys and a generally acknowledged good time to sell.

Remember that trying to time the market is often a fool’s errand. If you think the market has hit the top, it will probably just go higher. If you think we’ve hit bottom, there’s plenty more room to fall. You can only do your best and follow a strategy of trying to buy on the way down and sell on the way up. 

Probably the number one piece of advice is this: when you hold for the long term, you’re often much better off than panicking and selling at a huge loss. With that in mind, let’s take a look at some aspects of the markets that present good opportunities and things to watch out for as we close out 2022 and enter 2023.

Where are the Opportunities for Economic Growth?

If you follow the chart line of the stock market for the first part of 2022, you’ll see it headed downward. The S&P 500  has declined in each of the first three quarters. With its total decline so far at about 22%, that puts it squarely in “bear market” territory. 

Of course, there’s no guarantee that the market doesn’t have more to fall. However, some are saying that this represents a good time to enter the market. It really just depends on what your investment objectives are. Let’s look at a few examples.

First Time Investors

You’ve got your first job, and a little money to invest. You are looking long-term, and your investment strategy reflects that. Now is a great time for you to get into the market. It’s a solid entry point: down from historic highs, but plenty of room to climb in the future. You have the opportunity to choose from several growth stocks that may be too risky for shorter-term investors.

Retirees on a Fixed Income

If you aren’t looking so long-term, now might be a good time to move towards a more cash-based position. Financial markets are likely to remain volatile for some time, so now’s a good time to sit out and watch from the sidelines.

Asset-backed securities may be a good option if you are in this category. These financial products provide a steady stream of income. This is because of collateral like credit card debt, home loans, and other forms of debt. 

While these did get a bit of a bad reputation during the 2008/2009 financial crisis, they are much safer now. If you aren’t looking for growth and instead looking for consistent income, these can be a great choice.

Working Professionals

If you are in the middle, now is a great time to look for growth stocks. Do some research on businesses that will produce high-demand products and offer valuable services for years to come. No matter the financial conditions, there are companies that continue to offer things people need. 

You certainly want to reduce your risk exposure, especially the closer you get to retirement. It’s better to play it safe at this point in your career than it is to go chasing huge gains. Consider adding some high-yield bonds and other safe investments. 

Look for Value in Your Asset Allocation

One example might be high-value stocks in the healthcare sector. Another example might be the defense industry, which could be ramping up to deal with new threats from Russia and China.

Another thing to keep in mind as you look at asset allocation: there will be products that people may hold off on now, but buy in the future. Just look at what happened after pandemic restrictions eased: there was massive pent-up demand in the travel sector. When the full economic recovery arrives, you’ll be in a great position.

Calculate your portfolio asset allocation using Pickilo
Calculate your portfolio asset allocation using Pickilo

Just because the global situation is a bit uncertain doesn’t mean that international stocks aren’t still of great value. Innovation in products and manufacturing is occurring all over the world. Oftentimes these lesser-known companies may provide a great investment opportunity, albeit a slightly greater risk.

Where Will Interest Rates Head in 2022?

Those wondering if interest rates were going to head upward got their answer from the Federal Reserve this year. The Fed started itching rates upward to combat historically high inflation. One thing has become clear: there doesn’t seem to be an easy fix for the inflation that has plagued both the US and foreign countries.

The problem is that higher inflation seems to come from several issues that have significantly affected the economy. Supply chain bottlenecks and easy monetary policy are just a couple of the issues that have affected core inflation.

The European Central Bank has also adopted a monetary policy resulting in rising interest rates. Europe, too, has experienced the same high inflation that the US has as well.

Fixed Income Securities

While interest rates are very likely headed higher, long term, no one is sure exactly how central banks are likely to fight inflation. Changes in political administration introduce even more uncertainty. If you are looking for an investment product that will pay a known amount, regardless of rates, our investment advice is to consider fixed-income securities.

There are a few options to consider. All have unique properties that may make them a good fit with your portfolio. Let’s look at a few:

Treasury Notes 

Also known as “T-Notes,” they have a typical face value of $1000. These pay semiannual interest payments at fixed rates. 

Treasury Bonds

T-Bonds, as they are usually called, mature in 30 years. They usually have “par values” of $10,000. So, if you are looking long-term, these may be a good option right now.

Treasury Bills

T-Bills are a shorter-term security. They are purchased at a low value, then when they mature in a year, you get the full mature amount. The difference between these amounts is your return on investment. They are about as sure of a thing as you can get.

Municipal Bonds

Many of the large projects in your city or town may have been partially funded by “Muni-bonds.” The interest you earn on these can be tax deductible in certain situations.

Certificates of Deposit

Rather than helping to fund infrastructure projects, CDs are a way to help fund the bank. In return for your investment, you’ll earn guaranteed income after a predetermined period of time has elapsed. 

Risk Management

All of these products help to reduce risk and exposure to market volatility. They are a great hedge to include in your portfolio against any market downturns. Government and bank bonds are extremely safe. The same isn’t always the case for corporate bonds, so make sure to do your research before you invest.

Pros and Cons

Just like any investment product, there are advantages and disadvantages. On the advantageous side, these products are generally very steady and safe. On the downside, let’s say inflation spirals higher than the interest rate you’ll be receiving. That would mean the end market value would yield a much lower rate of return or even a loss.

Where are the Emerging Markets in 2022?

International markets are certainly no refuge from price volatility. This doesn’t mean they can’t be a good investment decision. It does mean that you’ll need to closely watch the economic conditions in these markets before making international investments. Let’s look at some emerging markets and what to expect.

Stock market outlook in emerging markets


As the global epicenter of the COVID-19 pandemic, China has certainly seen its fair share of ups and downs over the last few years. Draconian lockdowns led to tightening financial conditions and cost pressures. The heightened volatility was also a result of increasing tensions between China and Taiwan.

The fact remains that China has an enormous market share of manufacturing in the electronics and consumer goods segments. That certainly won’t change. Slower growth may be on the horizon, however.


If you thought the political situation in the US was unpredictable, then you should take a look at Brazil. The recent election of Luiz Inacio Lula da Silva has led to some uncertainty about what the economic situation in Brazil would look like after the change in leadership.

Still, there are great opportunities to be found in Brazil. It remains one of the most exciting emerging markets, and worth considering in any investment portfolio.


Right now, India has a better-than-average outlook as an emerging market. While rising rates are hitting India as well, it is still estimated to hit a 7.3% rate of growth in 2022. There are some factors that are limiting growth, however.

The difficulty of doing business in India has earned it a somewhat poor reputation compared to other countries that attract companies, such as Vietnam. Global consulting powerhouse Deloitte surveyed 1200 business leaders recently, and the majority agreed: it’s harder to do business in India than elsewhere.

Infrastructure in India isn’t necessarily keeping pace with demand either. This may be limiting some of the interest in investment there. India is, however, looked at as a fairly safe bet for the institutional investor. This means it may be a good place to put your money as well.


Is it a good time to invest in Russia? It could be, depending on how long-term you are looking. The problem is that tensions between Europe and Russia are likely to get worse before they get better. The generally accepted view is that there are really no leaders likely to make major positive changes even if Vladimir Putin finds himself out of a job.

Russia still supplies India, China, and other countries with some of the natural resources they need to keep their economies going, so commodity prices do have room to grow.

Consumer Spending

Something to keep in mind is that several high-profile companies have started tightening their belt when it comes to hiring and firing. Amazon, Twitter, Disney, and Google, to name a few, have enacted hiring freezes and begun to lay off large numbers of workers.

Where are wages headed?

The feeling is that consumers may begin to spend less as economic conditions become more uncertain. The immediate time in the wake of the pandemic reflected a massive hiring binge on behalf of some employers. Labor demand surged as positions reopened, and higher wage growth was on the horizon. 

Then came inflation. Now, real wage growth has been wiped out by the increased cost of goods. As companies tighten their belts, it’s likely that wages are going to be stagnant for a while. As we enter the holiday season, it will be important to watch consumer sentiment to see where we’re headed.

Inflation: Will it Continue?

This is the million-dollar question affecting investment decisions right now. It’s a serious question indeed. For years now, easy monetary policy looked like the way to go. In the wake of massive pandemic spending on behalf of the federal government, raining money everywhere, core inflation has climbed and climbed. Even after supply chain issues were no longer pushing inflation upwards, it remained high.

One of the biggest concerns right now is that the high inflation will continue despite the Fed, and lead to stagflation. This frightening scenario occurs when you see the following circumstances:

  • High inflation
  • High unemployment
  • Slow economic growth

This situation has occurred both in the United States and abroad. It was first observed after the oil crisis in the 1970s. What’s worrisome is that clearly, we seem to be hanging on by a thread in some ways, and a major calamity or series of smaller ones could bring on stagflation. 

Energy Market Outlook

Energy prices are no less volatile this year, thanks to unpredictable weather and politics. In the United States, a serious hurricane and supply shortages pushed prices at the pump to stratospheric levels. 

Stock market energy outlook

Oddly enough, in Europe, Natural gas prices have fallen due to a warmer-than-average winter. This may signal a good time for funds that include energy stocks, as colder weather earlier next year combined with poor relations with Russia may send prices skyrocketing. 

Market Risk is a Given

As the old saying goes, past performance is no guarantee of success. You need to price the risk of low future performance into your buying decisions. Keep an eye on these major factors as you make portfolio allocation decisions:

  • Interest rate risk
  • Credit Risk
  • Liquidity Risk

Any investment advice needs to look at best and worst-case scenarios for all of these when deciding on a plan. 

Speaking of a plan, the way you make and execute a plan is just as important as what stocks you decide to add to your portfolio. You need to consider when to stick to the plan, when to modify it and when to throw it all together.

When you consider risks and the best-case/worst-case scenarios, it can help you guide your exit and entry strategies. The last thing you want to do is dump everything because of one piece of bad news, or a bad day on the market. 

Remember that when stocks crash, many investors see that as a buying opportunity, and they’ll bounce back the next day. And, even when the price tanks, you still have something of value: the shares themselves. If you sell, you’re left with nothing but losses. 

There’s a phrase that people have been using in the internet age, and that’s “FOMO: Fear of Missing Out.” Usually, this stems from missing an opportunity to make a comment on a viral post. It pertains to the stocks as well. 

Don’t make decisions out of FOMO. Don’t “FOMO in” or “FOMO out.” Make decisions based on your long-term planning and goals. Very often, the crowd whips people into a frenzy, and they don’t want to be left on the outside. It’s clear that sometimes, outside is exactly where you should be! 

Economic Growth Will Return: The Question is “When?”

There are more questions than answers right now when it comes to how central banks around the world will cope as interest rates rise. As the economy heads towards stagflation, the labor market will continue to get rocked.

While it may be painful to see your portfolio and 401K reduced in value, always take the long view. It’s perfectly fine to take some profits or reduce your risk exposure, but you don’t want to miss out on opportunities for the future.

It’s also a good idea to take a more granular approach to things. We’ve mentioned sectors and emerging markets that are poised to experience economic growth now. Others, not nearly as much. 

Rather than taking an all-or-nothing approach, now is the time to play it safe, and look for long-term opportunities. There will be growth, it may just take a while. Look for companies that have solid financials and are poised for health and stability over the next decade.

Beware of Crystal Balls

If you saw and enjoyed the movie “The Wolf of Wall Street,” you probably recall the scene where Matthew McConaughey tells Leonardo DiCaprio that no one knows what the market is going to do. Sure many people, Warren Buffet, for instance, have great track records. But the reality is that with the chaos of global events, the future is always uncertain.

The internet is full of investment advice. This is especially so on forums like Reddit. It’s wise to be extremely skeptical at all times. If what you read online causes you to explore new opportunities, that’s great. You need to carefully do your research and consider all possible outcomes before investing any amount of money.

Your Portfolio in 2022 and Beyond

One thing is for sure, diversification of your portfolio can act as a good hedge against whatever comes your way. Some will point out that diversification may mean an overall lower return if some assets do well, and others do not. This is usually something people say when economic times are good, and everything is headed upward.

We are not in those times. Just look at what happened to the cryptocurrency sector. Some people with “all in” expecting to go “To the moon,” and they have now crashed back to earth. The wise people made some careful investments in crypto, and can now wait out this uncertain time with lots of other asset classes that will do just fine.

The bottom line is this: spend some time considering your investment goals. Be honest about what you hope to achieve with your stock portfolio, then make a plan. Watch the news, stay informed, and you’ll achieve success this year, next year, and beyond.

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