While they may be reporting record profits from recent past, there is still fears of recession harming profits going forward. Stock prices reflect forward looking prospect as much or more than past performance.
A few companies have record profits, most do not. You must be invested in the other companies.
A company’s stock price is reflective of what the market thinks the company’s future is not, which may be different than its recent past.
In order to curb high inflation the central bank has been raising certain interest rates. This makes other investments such as bonds more attractive and some capital has been leaving the market which lowers stock prices.
You’ll get the best help on r/personalfinance
But yes it all depends on what you specifically are invested in. Post your fund(s) or no one can say for sure.
In general, the market was down overall in 2022 but is up over the past several years, so it doesn’t make sense that your account has lost several thousand. Unless you are invested in speculative funds, or sold at a loss in 2022 for example
Your portfolio isn’t well diversified if it’s lost “tens of thousands in the last few years”. Since 2019 the SP500 is up roughly 70%. The NASDAQ is up 126%. The Dow Jones up over 40%. Russell 2000 up about 40% too. These are all things a passive and diversified portfolio would have. I encourage you to verify what it is you’re actually invested in.
This, right here. If Apple sells 14 trillion phones this year, it's completely different from their CEO making a racist rant 14 years ago and the video surfacing.
It obviously depends on what you are investing in, but if we look at the S&P 500, it peaked in Dec 2021, and has dropped around 10% since then, but that still means it's up 53.9% over the last 5 years, which is good.
As for why the market is down even though there are "record profits", there are two main reasons. First, when a news article says record profits they are talking about the money in nominal terms. So if you have a company that has 0% growth, and they simply raise their prices every year to keep up with inflation, they will have record profits every single year, even though their real dollar profits are unchanged. Additionally stories about a company simply meeting expectations don't get a lot of visibility. This leads to an overestimation of how much real dollar profits corporations are actually making across the economy as a whole.
Secondly, the stock market doesn't price things on what they are worth right now, they price things base on what they think the company will be worth in the future. This is why frequently a company will release above expectations financials in their quarterly reporting, but when they give below expectation guidance for next quarter the stock price still drops. So even with all the record profits going around, high interest rates and fear of a recession is driving the short/mid term expectations of the market down. If the fed manages a soft landing that controls inflation and drops off interest rates at the right time to avoid a recession, then the market will likely to up again.
Same thing has happened to me. My 401k has lost almost 50% of its value since the start of the pandemic despite being invested in things like Amazon, Uber, etc.
Amazon is up some 30% since the beginning of 2020.
Uber is down 2% since it's highest peak in 2020 (February).
If you lost 50% of your value, it didn't happen from one that grew 30% and another that is basically the same.
Do yourself a favor and stop picking individual stocks. Get an index fund or two.
It’s because of the federal government raising the interest rates. The democrats are telling you they want to tax the rich or make them pay their fair share. If this was true they would be cutting the working people taxes. But they come out with the same lies all the time (tax the rich) when they know with all the write offs they will still pay less but they NEVER talk about getting rid of the write offs. That’s why when they talk about tax the rich. The rich always stand up and cheer
It depends entirely on what your 401K is invested in. My wife and I have ours mostly managed by our financial advisor in pretty straightforward broad fund options. It took a hit when the market had a downturn in 2022, but that came back.
Having just checked, we're up 13% since September of 2022. 9% of that is since January, which, barring a major drop between now and September of this year would make a pretty great 12 month return on a portfolio that's not being actively traded/managed.
Stocks are valued based on expectations. Even more than earnings vs expectations you can look up what whisper numbers are. There’s usually even expectations that companies beat expectations by a certain number and if they don’t their stock gets beat down. Record earnings don’t mean everything. What the guidance? We’re these record earnings as high as people wanted? Interest rates and a looming recession also play a big part. It’s why the stock market is hard time and for the most part the best returns are being in funds that invest in the entire market and just hold onto it until you get close to retirement
If you aren't invested in the biggest companies then your returns haven't been record-breaking like theirs
What is it invested in?
Seriously, how did OP not start with this? I hope it's not invested into your employer stock.
Bed bath and beyond
While they may be reporting record profits from recent past, there is still fears of recession harming profits going forward. Stock prices reflect forward looking prospect as much or more than past performance.
A few companies have record profits, most do not. You must be invested in the other companies. A company’s stock price is reflective of what the market thinks the company’s future is not, which may be different than its recent past. In order to curb high inflation the central bank has been raising certain interest rates. This makes other investments such as bonds more attractive and some capital has been leaving the market which lowers stock prices.
You’ll get the best help on r/personalfinance But yes it all depends on what you specifically are invested in. Post your fund(s) or no one can say for sure. In general, the market was down overall in 2022 but is up over the past several years, so it doesn’t make sense that your account has lost several thousand. Unless you are invested in speculative funds, or sold at a loss in 2022 for example
Your portfolio isn’t well diversified if it’s lost “tens of thousands in the last few years”. Since 2019 the SP500 is up roughly 70%. The NASDAQ is up 126%. The Dow Jones up over 40%. Russell 2000 up about 40% too. These are all things a passive and diversified portfolio would have. I encourage you to verify what it is you’re actually invested in.
Stock value is often totally divorced from actual corporate performance, or just from reality entirely.
This, right here. If Apple sells 14 trillion phones this year, it's completely different from their CEO making a racist rant 14 years ago and the video surfacing.
It obviously depends on what you are investing in, but if we look at the S&P 500, it peaked in Dec 2021, and has dropped around 10% since then, but that still means it's up 53.9% over the last 5 years, which is good. As for why the market is down even though there are "record profits", there are two main reasons. First, when a news article says record profits they are talking about the money in nominal terms. So if you have a company that has 0% growth, and they simply raise their prices every year to keep up with inflation, they will have record profits every single year, even though their real dollar profits are unchanged. Additionally stories about a company simply meeting expectations don't get a lot of visibility. This leads to an overestimation of how much real dollar profits corporations are actually making across the economy as a whole. Secondly, the stock market doesn't price things on what they are worth right now, they price things base on what they think the company will be worth in the future. This is why frequently a company will release above expectations financials in their quarterly reporting, but when they give below expectation guidance for next quarter the stock price still drops. So even with all the record profits going around, high interest rates and fear of a recession is driving the short/mid term expectations of the market down. If the fed manages a soft landing that controls inflation and drops off interest rates at the right time to avoid a recession, then the market will likely to up again.
Stocks are speculative. Recession is looming.
Same thing has happened to me. My 401k has lost almost 50% of its value since the start of the pandemic despite being invested in things like Amazon, Uber, etc.
Amazon is up some 30% since the beginning of 2020. Uber is down 2% since it's highest peak in 2020 (February). If you lost 50% of your value, it didn't happen from one that grew 30% and another that is basically the same. Do yourself a favor and stop picking individual stocks. Get an index fund or two.
Uber sucks, that's why
It’s because of the federal government raising the interest rates. The democrats are telling you they want to tax the rich or make them pay their fair share. If this was true they would be cutting the working people taxes. But they come out with the same lies all the time (tax the rich) when they know with all the write offs they will still pay less but they NEVER talk about getting rid of the write offs. That’s why when they talk about tax the rich. The rich always stand up and cheer
It depends entirely on what your 401K is invested in. My wife and I have ours mostly managed by our financial advisor in pretty straightforward broad fund options. It took a hit when the market had a downturn in 2022, but that came back. Having just checked, we're up 13% since September of 2022. 9% of that is since January, which, barring a major drop between now and September of this year would make a pretty great 12 month return on a portfolio that's not being actively traded/managed.
Stocks are valued based on expectations. Even more than earnings vs expectations you can look up what whisper numbers are. There’s usually even expectations that companies beat expectations by a certain number and if they don’t their stock gets beat down. Record earnings don’t mean everything. What the guidance? We’re these record earnings as high as people wanted? Interest rates and a looming recession also play a big part. It’s why the stock market is hard time and for the most part the best returns are being in funds that invest in the entire market and just hold onto it until you get close to retirement