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It will come as no surprise to anyone that 2022 was a tough year for the stock market. It was a tough year for the economy. Gas prices spiked and inflation, long dead, rose from the grave to make everything more expensive. All you needed to do was go the grocery store to see the damage. I bought some eggs the other day and asked myself, “What happened?”
Many are not sorry to see 2022 come to end. The whole world took a beating. As bad as it was here in the United States, there were worse places to live, many worse places. Imagine you lived in the Ukraine or the Congo, for instance. But 2022 is over. It is a new year with all of the new hope that a new year can bring.
I am a student of the stock market. I am a student of investing. Looking back on 2022 it is interesting to look at some of the winners and losers. Surprisingly, in a year where the market was down almost 20%, there were winners. The best performing stock of 2022 was Occidental Petroleum. I guess it is not shocking that in a year where the price of oil spiked dramatically, the best performing stock would be an oil company. Occidental was up 164% on the year. Other oil stocks also performed well, but OXY was the king.
The word Occidental means “western.” It is the opposite of oriental, which means “eastern.” Occidental has a long, colorful history. It was run for decades by a man named Armand Hammer. Hammer had close ties to the Soviet Union. He engaged in lucrative trade with the Russians at a time when most U.S. entrepreneurs were banned. Most of that trade went through the Port of Jacksonville.
A handful of other company stocks also did well in 2022, notably Merck & Co., a pharmaceutical manufacturer. Merck stock rose from $70 to $111, which is a pretty nice gain. Other stocks that were up for the year included a number of food companies like Campbell Soup, Pepsico, General Mills, Coca-Cola and Kellogg. I owned all of the companies that I have mentioned so far, but I also owned some others that did not do as well. Amazon, Microsoft and Google were all down substantially for the year, for instance.
The worst performers for the year included the online furniture seller Wayfair and crypto-token exchange Coinbase Global which both lost 83% of their value in 2022. I guess Wayfair stock wasn’t just what you needed in 2022. Coinbase’s decline mirrored the collapse of the crypto-token fad that once enraptured the unsophisticated. I did not and would not own either of these stocks. But, as I said earlier, I owned some things that went down.
So, what does this tell us about 2023? As a student of the market, I can tell you that the top performing stocks of any given year are rarely the top performers the next year. That goes for worst performers as well. If I were looking for a one-year trade, and I rarely am, I would peruse the list of the worst performers and pick out a strong company that did poorly and bet on it to recover. I still would not buy Wayfair or Coinbase, but that’s just me.
Scott A. Grant is a writer and professional investor. He is a long-time student of the stock market. He welcomes your comments at scottg@standfastic.com.
