Was 2022 the year of the bear or the energy? A half-glass perspective

The year 2022 seemed like a rollercoaster for the markets, didn’t it?

It was the year we all realised that the glass is not only half-full or half-empty, but it's also refillable.

Many investors saw their portfolios being in red owing to the Russia-Ukraine war, ever-increasing inflation coupled with rate hikes and a general slowdown in growth.

However, if you had energy stocks in your portfolio, you would have been on cloud nine.

Was 2022 half-empty or half-full?

Major US stock indices tumbled in 2022 and suffered their worst year since 2008 while also snapping a 3-year positive streak.

The Dow Jones was down by approximately nine per cent, the S&P500 approximately by 20 per cent and the tech-heavy NASDAQ by more than 33 per cent.

The glass for the tech stocks may seem half empty as the big 5 in tech (FAANG) have seen their stock prices fall significantly in the past year.

However, on the other hand, there was also a lot of "energy" in the markets. The S&P 500 energy sector, which comprises oil and gas giants like that of ExxonMobil and ConocoPhillips, was up 50 per cent in 2022.

If you had invested in these oil and gas companies, your portfolio would have been energised owing to the stellar run of such companies.

Energy companies have started taking the Environmental, Social and Governance aspects of their business seriously as ESG investing has become a priority for several investors.

Bears vs Bulls: the battle is not over yet!

The Russia-Ukraine war is still waging, and inflation, even though reducing, is still not under complete control. These factors will play a key role in the battles between the bears and bulls.

—Vijay Valecha is the chief investment officer at Century Financial.