Morning Brief: Why Ordinary Investors Got Hit So Hard in 2022

In 2022, stocks and bonds took a beating as the Federal Reserve hiked interest rates to combat high inflation. Meanwhile, investors became increasingly worried that the economy was headed for a recession. The resulting selling pressure left many portfolios in the red. But don’t give up on the stock market just yet, experts say.

The reason ordinary investors got hit so hard in 2022 is because of the telecommunications giant's lack of a long-term strategy to compete with rivals T-Mobile (NASDAQ: T-MO) and AT&T (NYSE: T). Verizon is facing tough competition from both ends of the spectrum, according to MoffettNathanson analyst Roger Entner.

The company is also in a difficult spot financially. Its leverage over competitors is at an all-time high, and that's a big problem.

Its debt is costing it a premium versus its peers, which is making it less profitable than it would be if it didn't have that risky debt.

The stock is in a bear market and has fallen from a high of $28 to the current price of $17, but it still offers plenty of buying opportunities for contrarian investors. For one thing, its dividend yield is now above 7%, and management has raised it for 18 consecutive years. The company also donates money to charities that help victims of domestic violence, educate children and promote energy management.

Tyson Foods is the world's largest chicken producer, processor, and marketer. Its primary focus is to deliver low-cost, high-quality products that consumers want.

To do this, Tyson has a strong focus on research and development. This is important because it helps the company stay ahead of the curve in terms of new products.

It also tries to reach consumers in different markets and find ways to appeal to them. For example, it's known for sponsoring events for USA Gymnastics and Crew Chief Club (an association of NASCAR head mechanics).

As a result, Tyson can be more resilient in times of economic downturns. Its diversified business model also allows it to survive in an industry that is becoming increasingly competitive.

Pfizer (PFE) makes prescription medicines and a variety of consumer products. Its Pharmaceuticals segment markets some of the industry's most popular drugs, including Lipitor (3.6% of sales), Norvasc (1.8%; high blood pressure), Cardura (1%; cardiovascular disease), Accupril (1%; asthma) and Premarin family of medicines (1%; menopause).

Pfizer's Covid-19 vaccines are expected to provide solid top-line growth in 2022. The company is also eyeing inorganic growth to expand its drug pipeline.

As long as its patents hold out, Pfizer should be able to keep its revenue growth. It has the product portfolio and inorganic pipeline to do it.

However, with inflation rising and the Fed raising interest rates, investors may want to avoid stocks that are facing a big drop in profits. This is because they may not recover as quickly as other companies.

For ordinary investors, General Electric (NYSE: GE) has been a rough stock to own in recent years. Its shares have underperformed the S&P 500 Index every year since 2016.

The company has faced a number of headwinds, including supply chain challenges and lingering concerns over whether U.S. production tax credits for wind power investments will be extended over the long term.

But these short-term concerns won’t last forever and aren’t enough to deter the company from delivering solid revenue and earnings growth. GE’s healthcare and aerospace businesses are more insulated from broader economic trends than most, delivering impressive growth regardless of what happens to the economy as a whole.

The company is also working to restructure its business model by splitting up its aviation, energy and healthcare businesses into three distinct companies by 2024. This will make GE more financially disciplined and allow the company to focus on its core operations. But it’s a big move and could take time to play out.