A year of unexpected challenges
At the beginning of this year I set out to accomplish 6 goals.
In the end I only managed to complete 3 out of 6, lol. Next year I shall lower my expectations.
What caught me by surprise was how unique this year has been for the economy and financial markets.
Over the last 10+ years of investing I have never witnessed anything like this before.
If you went back in time to a year ago, who would believe you if you told them the following…
- That Eastern Europe goes to war.
- Food and energy prices go through the roof.
- Both stocks and bonds fall in price at the same time.
- China locks down 1/4 of its economy, causing its GDP growth to fall to the second lowest level since 1992.
- Supply chain disruptions worldwide causes inflation in developed countries to rise to 40 year highs.
- And we see the most aggressive policy tightening cycle by central banks in modern history.
Almost none of these events were on anyone’s radars at the end of 2021.
Inflation was thought to be “transitory.”
Most economists were forecasting the Federal Reserve to hike rates by just 1.00% in 2022.
The Fed ended up hiking by 4.25%.
And 4,910 was the median forecast of 45 strategists polled by Reuters to estimate where the S&P 500 was going by the end of 2022. Today the index is sitting at 3,844. That’s a miss by more than 1,000 points or 27%. Oy vey. 😞
So given that context, here is what happened with my goals for this year.
- Increase household net worth by $300,000
Fail: Our net worth only grew by about $180,000. We actually lost a lot of money on paper on our liquid assets. However, we have over $3,000,000 worth of real estate and we use the government assessed value of our properties. This figure is updated at the beginning of each year, so our real estate actually increased a lot in 2022. The same can’t be said about next year though as I new assessed values to fall quite a bit dragging down our net worth for 2023.
- Borrow $130,000+ on margin
Pass: I started the year with $110,000 of margin debt. And now I have $320,000 lol. This represents a $210,000 increase. I wasn’t expecting to take on this much debt this year, but the stock market keeps falling so I’m inclined to keep buying because as stocks get cheaper, their future expected returns become higher.
- Read at least 5 books
Pass: I managed to read 5 books in 2022 with a mix of topics including finance, self help, and parenting.
The Unlucky Investor’s Guide to Options Trading.
How to Talk to Anyone.
Positive Discipline, the First Three Years.
- Meditate for 60 minutes a day for 60 consecutive days
Fail: I tried this for about 20 days, and then every other day for 10 more days. Then stopped when I didn’t notice anything different about my mood or state of mind. It’s possible I already spend part of my days practicing short bursts of meditation but just don’t know it.
- Make 10% return in my margin account
Fail: This was a disaster. I’m down about 20% instead of up 10%. Better luck in 2023. 😅
- Earn $20,000 in net premiums from trading options
Pass: I made $50,324 in option premiums after accounting for all the losses and trading commissions.
Even if we head into a deep recession in 2023 I expect the financial markets to perform better than this year.
Historically speaking there are a lot of indicators that point to a positive year for the stock market in 2023.
For example, the stock market index typically gains 16% on average in the third year after a US election, which happens to be next year.
In terms of predictions I am expecting an economic downturn in the first half of 2023, which will force central banks to cut interest rates, which will help push financial markets higher. 🙂
Anyway I hope you had a better year financially than I did.
Good luck with your investments. Happy holidays, and all the best in the new year. 😀
Random Useless Fact:
If a set of identical twins each marries another set of identical twins, their kids will genetically be siblings.
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Hey Liquid, the year 2022 has been indeed such an unpredictable year. I am not surprised if most folks missed their financial goals this year. I’d love to read your next blog post where you share your goals for 2023. By the way, excellent job in more than doubling your option trading premiums earned compared to your initial goal. 👏
Thanks Moe. Will certainly be sharing my goals for this new year soon.
All the best to you in 2023. 😄
60 minutes is a big target to set for meditation? Have you tried regular shorter periods? I started doing 10 minutes a day and found it really helped my focus and mood.
I have tried shorter periods but I find it takes me at least 30 minutes to really become immersed in it. I can try 10 minutes a day and see how it goes. Thanks for your suggestion. 😁
Ha, I’m glad I’m not the only one who fails at meditation. It feels good when you can do it right, but building a daily habit to meditate is so hard. I tried reading “Super Mind,” which is basically THE book on meditation but like meditating, I found it way too boring.
What are your option premium goals for 2023? With $50k net premiums in 2022 I imagine you’re amining higher for 2023?
Great question. I haven’t given it much thought yet. I’ll probably aim for the about the same as last year because my IBKR portfolio value is down a lot, like 20% to 30% lower compared to a year ago. And due to the strategies I use the amount of option premiums I can potentially earn depends on my how much liquidity I have to play with. 😀 I’ll probably have a better answer in the coming days.
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That’s quiet an achievement! 🙂
Yeah that’s some serious cash.
Thanks. I was way more active with options trading in 2022 than in previous years. I’m hoping to keep the momentum going in 2023.
The only downside is I do take on the risk of getting assigned stocks. This is not always ideal but sometimes it can work out in my favour if the stock rebounds soon after.😁
You mean those forecasts for how things will be at the end of this year aren’t worth anything?
Haha, exactly. 😂