2002 Twenty Years Later

I cannot help but to mention how much trading 2022 feels like 2002, a year in which I was a young broker getting my brains blown out in a posh NYC boardroom each and every day. Every Friday the sales manager would cull the workforce by 2 or 3 lads, keeping is all on our toes. Today we have a sense of entitlement, all due to the bond market being nationalized in 2008. We have a sense, in spite of the losses, that in the end everything will be all right. In 2002, we had nothing but grim times ahead, up until the Bush tax cuts and Iraq war stoked risk and shot the market higher by 50% in 2003.

Here are the 2002 / 2022 parallels.

(QQQ returns by month 2002/2022)

Jan -1% / -8.75%
Feb -12.3% / -4.6%
March +6.7% / +4.6%
April -12% / -13.6%
May -5.3% / -1.6%
June -13% / -9%
July -8.6% / +12.5%
August -1.5% / -5.1%
Sept -11.8% / -10.7%
October +18.5% / +4%
November +12.9% / +2.5% (ongoing)
December -12.1%/ ?

FULL YEAR 2002: -31.5%
FULL YTD: -29%

If history is of any reference, we are due for a strong rally next week and a total an complete annihilation to cap off 2022 during December. If we are to travel down similar roads, by April of 2023 the market would have bottomed and we could be off to the races again.

Naturally, we all want to believe that things are different “this time” because we are alive during it. Truth is, human behavior is similar over all time frames. The old have always hated the youth and the youth have always made reckless decisions. Markets will, at some point, price in the very worst outlook and march higher in spite of bad news, as long as government policy is conducive with growth. With Cadaver Biden in office, we might not get that government boost in 2023 and might, perhaps, continue lower until the 2024 elections.