Investing through a bear market: portfolio update and 2022 action plan

Executive overview

Markets fell hard in 2022 — S&P 500 down 21%, Bitcoin down from $60k to $23k, crypto portfolio down 37%. Panic-selling feels rational but historically destroys returns; the Dow 1929 crash broke even in 4.5 years once deflation and dividends are accounted for.

The strategy: maintain dollar-cost averaging while keeping enough cash to buy real estate if prices drop further.

Staying consistent through downturns, not timing the market, is what protects long-term returns.

Why markets are falling

• Inflation hit 9% in 2022, up from ~2% in 2018–2019, driven by money printed in 2020–2021
• The Fed raises rates to cool inflation; higher rates = more expensive mortgages, car loans, business loans
• Rate hikes and stock market performance are negatively correlated — rates up, stocks down
• GDP declined 1.6% in Q1 and was tracking −2.1% in Q2, meeting the technical definition of recession
• Further rate hikes expected in August–September, sustaining downward pressure on markets

What history says about bear markets

• S&P 500 has survived every bear market since 1926, recovering and reaching new highs each time
• Dow Jones fell 90%+ in 1929 but broke even in 4.5 years if you held and accounted for dividends and deflation
• The key variable: whether you panic-sold or stayed consistent

Current portfolio breakdown

• Brokerage account (started March 2020): was +33% at peak, now −5%; all gains erased
• Stock-picking account (Webull): up 8% — best performer; concentrated in Formula One, Google
• Crypto portfolio: down 37%
• Advisor-managed portfolio (started 2022): down 3.7%
• Startup/fund investments: less than 5% of portfolio; not marked to market, low daily stress

2022 investment strategy

• Portfolio currently 50% cash; target is to reduce to 20% cash via ongoing purchases
• Dollar-cost averaging monthly into: short-term corporate bonds, growth ETFs, value ETFs, small-cap, international bonds, real estate ETFs
• Holding elevated cash reserves through September–October in case of a deeper crash
• Tracking real estate daily on Zillow (Miami, local area, Los Angeles) to spot price declines

Real estate outlook

• Financial advisor caution: Florida and vacation-rental markets (Palm Springs, Miami) historically hit hardest in recessions
• Silicon Valley and New York tend to hold value better through downturns
• Current observations: Pacifica and Denville condos sitting on market for months, selling at discounts
• Plan: buy within the next year if the right property is found; down payment reserved in cash

Mindset shift

• Losing tens of thousands on paper reframes the invest-everything approach
• Time with family and experiences are irreversible in a way investment losses are not
• Target: invest ~30% of income, spend the rest on life rather than maximum frugality
• Long-term goal: live off investment income within 5–10 years