If the past two years have taught us anything, it’s to expect the unexpected. 2022 seems to be very much following suit.
While 2021 was beset with challenges such as supply-chain bottlenecks, critical worker shortages, and a ramp-up in inflation, as well as the super-infectious Omicron Covid-19 strain, the S&P 500 ended the year 27% higher than it started.
However, 2022 is proving to be a whole new story. There is a lot for the market to digest. Top of mind is the conflict in Ukraine, with its terrible human toll and the global economic impact that we are yet to feel. Consider too, rising inflation, increased interest rates, a continued supply chain shortage, and the pandemic that is still with us.
The stock market is responding to this uncertainty. So far, the S&P has declined by around 7% since the start of the year, and that’s with some recovery. However, as difficult as it can feel, market volatility does not need to be cause for alarm.
TipRanks, a leading Israel-based fintech company, provides simplified research tools and unique data so that individual investors can make data-driven investment decisions, in all market conditions.
Market declines are temporary
As any experienced investor knows, market crashes are par for the course and this one, too, shall pass. However, it’s also worth remembering that not all declines recover as quickly as the one in March 2021, which is a lesson that could be hard to swallow for new investors.
Following the 1987 stock market crash, it took the indexes more than 18 months to regain losses and it took two years for the S&P to recover from the 2008 crash, when it lost nearly half of its value.
Nobody knows how the market will pan out in 2022. For long-term investors, knowing that historically, downturns are temporary, can offer solace. If looking at a portfolio dominated by losses is difficult, maybe put your phone away for a while and focus on the positives.
Low prices offer opportunities
Given recent price drops, there are bargain opportunity stocks available to investors. However, it’s important to avoid the hype and follow the data.
Wall Street analysts are hard at work, doing what they do best, assessing stocks and issuing their 12-month price targets and recommended actions. In other words, they are saying whether a stock is worth buying, selling, or holding and how much they predict the price will rise over the next year, based on their analysis.
Just this week, following an unexpectedly positive earnings report from Nike (NYSE: NIKE), fourteen Wall Street analysts issued reports that rated the stock a Buy, the average price target on the stock is $165.09 which suggests an upside potential of over 24% over the next 12 months from its current price of $133.
You don’t have to follow the financial news to find out which stocks are trending with analysts; TipRanks does this work for you. Its trending stocks tool presents the stocks with the most, the best, and the worst analyst ratings over different time frames.
Incorporate a data-driven stock score into your investing
If you want to add an extra layer of security to your decision-making, know that TipRanks has a data-driven stock score based on eight key market factors, called the Smart Score. The score was created to give investors an easy way to gauge a stock’s potential.
We have back-tested stocks with a maximum Smart Score of 10 going back to 2016 and found that stocks with a Smart Score of 10 have outperformed the S&P 500 index by almost 79% in this time. What’s more, since the start of January 2022, the outperformance of top Smart Score stocks has increased, suggesting that they offer a degree of market protection.
There are two ways you can incorporate the Smart Score in your stock research. First, by checking the Smart Score of any stock you are researching, for example, you can see that Nike has an eight of out ten score, which suggests outperform.
You can also search for stocks with a current Smart Score of ten using TipRanks’ Top Smart Score stocks tool.
Regardless of how the markets perform over the next few months, investors can always use data to find promising new investment ideas.
In collaboration with TipRanks