NEW YORK — For all the ink spilled over its horrors, the 2022 stock market will go into the books as an undistinguished one in the history of bad years. For traders who lived through it, though, certain things have made it feel worse than top-line alone numbers justify, a potential impediment to a quick recovery.
While the 25% peak-to-trough drop in the S&P 500 ranks in the lower range of bear-market wipeouts, it took a particularly jagged route to get there. At 2.3 days, the average duration of declines is the worst since 1977. Throw in three separate bounces of 10% or more and it was a market where hopefulness was squeezed as in few years before it.
This may explain why despite a smaller drawdown, pessimism by some measures rivals that seen in the financial crisis and the dot-com crash. Safety crumbled in government bonds, which failed to provide a buffer for beat-up equities. Buying put options as a way to hedge losses didn’t work either, adding to trader angst.
