History calls this a bear market, and rightfully so. Still, 2022\u2019s downturn lacked some traditional bear market features. It didn\u2019t start after euphoric sentiment blinded investors from deteriorating fundamentals (i.e., stocks didn\u2019t run out of proverbial wall of worry). Neither did a large, little-noticed negative destroy trillions of dollars in global GDP (a wallop).<\/p>\n
Rather, 2022 was the rare sentiment-driven bear market as multiple developments (by our count, at least seven) took turns knocking sentiment. A non-exhaustive list: politics, as discourse was hot ahead of midterm elections, and a fairly active legislature passed measures like the bundle of subsidies known as the Inflation Reduction Act (which raised risk aversion). Supply chain issues, which persisted from 2021. Elevated inflation. Fed rate hikes (and concern about monetary policy in general). Recession expectations. The Russia \u2013 Ukraine war. Oil and other energy supply concerns. China\u2019s on-again, off-again lockdowns.<\/p>\n
And probably relatedly, it was the rare bear market that ended without capitulation\u2014no steep, panicky final throes as investors rushed for the exits en masse. At the same time, when the bear market ended, it didn\u2019t do so with a rush of good news or sudden investor optimism. The bees were still stinging. Recession forecasts were gathering force. Inflation was still hot, with September 2022\u2019s CPI report showing an 8.2% year-over-year read in October 13\u2019s release.[ii]<\/a> Energy supply fears gripped Europe. The Fed was still hiking. And the yield curve was about to invert.<\/p>\n Yet without great (or even good) news, a bull market was born. A \u201cbetter-than-feared\u201d reality was enough for stocks to begin climbing again.<\/p>\n Lesson Two: Old false fears die hard.<\/p>\n Sir John Templeton said, \u201cBull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.\u201d This global bull market\u2019s first three years featured plenty of the first two, as investors frequently \u201cfought the last war,\u201d i.e., presuming whatever caused the last bear market will drive the next one.<\/p>\n This is common. After the 2007 \u2013 2009 bear market, investors hunted for hidden debt problems that could decimate bank balance sheets (e.g., fearing Dubai World\u2019s debt issues would hurt the UAE\u2019s finances and kick off another global financial crisis, or defaulting municipal bonds would roil US banks and investors anew). Similarly, following 2020\u2019s COVID lockdown-induced bear market, many worried COVID variants (and restrictions) risked killing the new bull market.<\/p>\n The 2022 bear market\u2019s biggest bee sting was inflation, a war investors still fight. Price growth started heating up in 2021, and by the time 2022\u2019s bear market began, US CPI was climbing 7.6% y\/y.[iii]<\/a> US inflation hit its fastest rate (9.0% y\/y) a few months later in June 2022, then decelerated over the following 12 months (to 3.1% y\/y in June 2023). Per the latest reading, US CPI rose 2.9% y\/y in August.[iv]<\/a><\/p>\n Now, slowing inflation doesn\u2019t mean prices fell\u2014rather, prices were just rising at a slower rate. The disconnect between rates and levels<\/a> understandably contributed to consumers\u2019 frustration with inflation, especially since prices for some common goods<\/a> (e.g., eggs) still seemed out of control. We get the annoyance\u2014paying more for necessities squeezes budgets and can cause financial hardship. Higher prices are especially hard for those on low or fixed incomes, households who couldn\u2019t easily overcome inflation with rising wages.<\/p>\n What prices are doing hogs headlines even now, from spurring conversation about Fed action<\/a> to questions about whether tariffs will heat up inflation again<\/a>. But inflation, while higher than folks want in the US and UK, has returned to normal<\/a>.<\/p>\n Exhibit 1: Inflation Has Returned to Normal<\/p>\n Source: FactSet, as of 10\/13\/2025. US CPI, year-over-year change, and MSCI World Index returns with net dividends, January 2022 \u2013 August 2025.<\/p>\n Lesson Three: Bull markets are pretty darn resilient.<\/p>\n Liberation Day tariff announcements spooked investors earlier this year, driving a classic bull market correction. The MSCI World dropped -16.6% from February 19 \u2013 April 8\u2014including -11.3% from April 2 \u2013 April 8.[v]<\/a> The S&P 500\u2019s pullback was a bit sharper, falling -18.7% from February 18 \u2013 April 8 and -12.1% from April 2 \u2013 April 8.[vi]<\/a><\/p>\n The fear was rampant, as President Donald Trump\u2019s tariffs were much bigger and worse than anything he signaled on the campaign trail. The worse-than-expected outcome forced markets to price in the new levies and potential global response. But after the immediate shock wore off, some realities began to emerge that mitigated tariffs\u2019 effects. Tariff collection and legal challenges<\/a>. Transshipping<\/a>. Dealmaking <\/a>(especially outside the US). By June, markets had erased their decline<\/a> and were on their way to registering new highs, exemplifying how things turning out better than feared right after Liberation Day contributed to stocks\u2019 rapid recovery\u2014typical of corrections.<\/p>\n Liberation Day volatility also highlights how bull markets aren\u2019t pristine. You should expect volatility along the way. It is the price tag of high returns stocks deliver over time. Consider, if we told you at the beginning of the year that global stocks would be up over 15% through October 10, it would have told you nothing of the sharp bounciness (negative and positive) along the way.[vii]<\/a><\/p>\n Keep bull markets\u2019 resilience in mind when considering the many fears still swirling today. Some think stocks are \u201ctoo expensive\u201d and future returns will be weaker. Others argue the bull market\u2019s only pillar of support is artificial intelligence\u2014and fret over a potential bubble in that space. We caution investors against thinking this time is different. False fears make up the bricks in the proverbial wall of worry\u2014and every bull market has them<\/a>.<\/p>\n [i]<\/a> Source: FactSet, as of 10\/10\/2025. MSCI World Index return with net dividends, 1\/4\/2022 \u2013 10\/12\/2022.<\/p>\n [ii]<\/a> Source: FactSet, as of 10\/13\/2025.<\/p>\n [iii]<\/a> Source: FactSet, as of 10\/13\/2025.<\/p>\n [v]<\/a> Ibid. MSCI World Index returns with net dividends, 2\/19\/2025 \u2013 4\/8\/2025 and 4\/2\/2025 \u2013 4\/8\/2025.<\/p>\n\u00a0<\/p>\n
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