Why I Stayed the Course During the October 2022 Crash
"Up close, it's a tsunami ready to swallow you, but from afar, it's just one of many ebbs and flows."
October 12, 2022. I still remember this date.
The S&P 500 had plummeted to -24% year-to-date, and the NASDAQ was even more disastrous. The news poured out headlines every day like 'Inflation Surpasses 8%', 'Fed's 4th Consecutive Giant Step', and 'The Beginning of the Lost Decade'.
[The Fed's Ruthless Interest Rate Hike Log at the Time]
| Year | Month | Rate Hike (Step) | Cumulative Base Rate |
|---|---|---|---|
| 2022 | March | +0.25%p | 0.25% – 0.50% |
| May | +0.50%p (Big Step) | 0.75% – 1.00% | |
| June | +0.75%p (Giant) | 1.50% – 1.75% | |
| July | +0.75%p (Giant) | 2.25% – 2.50% | |
| September | +0.75%p (Giant) | 3.00% – 3.25% | |
| November | +0.75%p (Giant) | 3.75% – 4.00% | |
| December | +0.50%p (Big Step) | 4.25% – 4.50% | |
| 2023 | Feb~Jul | +0.25%p (4 times) | 5.25% – 5.50% |
Money began to dry up in the market, and that fear was vividly stamped onto my account.
At that time, my account held Samsung Electronics, Apple (AAPL), TSMC, and Tesla (TSLA).
Back then, I didn't do systematic ETF investing like I do now. Driven by the idea that I should be a shareholder of great companies, I would dive into investment books until late after work, and these were the stocks I had chosen after much agony.
However, passing the sweet bull market of 2021 and taking a direct hit from the 2022 crash, the monthly investments felt like pouring water into a bottomless pit. Even opening the brokerage app itself was a pain.
Acknowledging My 'Limits' in the Midst of Fear
"Should I withdraw everything and go for a savings account even now?"
My hand reached for the sell button several times. Listening to the pessimistic macro analysis and expert warnings pouring out every day, not selling seemed rather foolish.
But ironically, what kept me steady amidst the shaking wasn't knowledge, but acknowledging my limits.
I am an ordinary office worker. Even Wall Street experts who look at monitors all day predicting the market were fighting, divided between "it'll drop further" and "this is the bottom". If they were wrong, how could I, who just read a few books in my spare time after work, possibly time the bottom of this market?
Ultimately, what I could trust was not complex macro forecasts.
"Humanity ultimately solves problems and moves upward."
It was just this one, most simple and ignorant(?) proposition.
The Power of a System That Overcomes Emotions
At that time, I didn't sell a single share. No, strictly speaking, I 'couldn't' sell.
Even when I tried to press the sell button out of fear of the market, I couldn't answer the question, "If I sell and it goes up, when will I buy again?" I painfully admitted that I had no ability to time the market.
When my willpower shook, what saved me was ultimately not my fingers, but the system (automatic transfer) running mechanically, excluding emotions.
This crash gave me tremendous insight. In the 2021 bull market, I thought I had a great eye for picking stocks, and in the 2022 bear market, I realized how weak my mentality was.
This painful experience and contemplation eventually led to a complete shift in my investment method. I stopped analyzing individual companies and fully transitioned to systematic ETF investing, buying the entire market starting in 2023.
The Truth Told by Two Charts
I'll compare two charts to show how immense the fear I felt back then was, and what it means looking back now.
[2021 ~ Oct 2022: The Peak of Fear]
S&P 500 in October 2022. The number -25% from the peak was a cliff massive enough to dye the entire chart red.
Standing in the middle of this cliff back then, I really thought the world was ending. The downward curve felt like it would continue endlessly without a bottom in sight.
[2020 ~ Present 2026: The Market Seen from Afar]
S&P 500 viewed from the current point in 2026 with a broadened timeframe. That terrible bear market of 2022 was merely a single small 'wave' within a long-term upward trend.
Isn't it amazing? The fact that the massive tsunami (MDD) that seemed ready to swallow me at the time was, viewed from afar, just one of the natural ebbs and flows of the ocean.
You Only Know the Bottom After It Passes
Looking back as time has passed, October 2022, when I was losing sleep debating whether to press the sell button, was exactly the market's lowest point.
What would have happened if I couldn't overcome the fear and threw away Tesla or Apple back then? Some people regret, "I should have bought more then," but I know. "Holding on and not selling then" was a success in itself.
The massive tsunami (MDD) that seemed ready to swallow me when viewed up close was, as time passed and viewed from afar, just one of the natural ebbs and flows of the ocean.
Another crash will come in my investment journey ahead. Every time that happens, I will take out this post and that chilling fear of October 2022 once again. And I will hold on just as ignorantly.
Stay the Course. 🌿