The year 2022 stands apart from others as the culmination of so many disruptive changes and trends. From the pandemic’s seesaw effect on our personal lives to the market’s volatile reactions. From unfamiliar inflation to supply chain failures. From two opposing viewpoints on major cultural topics to equally divisive politics. From concern about past events – to concern about the future.

While we may feel powerless in the face of most of the issues, maybe we can take a contrary – but powerful – position on our investments.

Taking stock

For years, checking our 401(k) and IRA balances was a pleasant task, with numbers rising higher than expected. But today, we look at balances with trepidation. “How far has it fallen?” “When was it last this low?” “Who do I listen to, and how do I respond?”

Each financial crisis – or period of sustained market losses – feels unique, like no other. Each time, it’s difficult to believe that a bottom will be found, things will stabilize, and the markets will start their upward climb once again. But, historically, that is what has always happened. It’s the cyclical nature of investing. Eventually, the markets recover.

The question is when.

Meanwhile, there’s value in seeking out the opportunities that often get overlooked amidst all the doom and gloom. Let’s look at a few.

Buying at bargain basement prices

Since early 2022, the prices of several blue-chip stocks have been cut in half. Supposedly safe bonds are down unimaginably. And cryptos – for those who have waded into those waters – have taken devastating tumbles while some altcoins have disappeared.

Very few people can see such steep losses in their portfolio without being affected, and the anxiety is human.

But what is the actual role of the investor? You are being compensated for taking on the risk that the company behind the stock will fail – or at least not meet expectations. Or that a new technology will not fulfill its promises. You are being paid for the uncertainty.

Right now, stocks that were the pride of portfolios everywhere are available at a fraction of their highs. And the chance of them not regaining their value is minimal. Buying quality stocks at these discounts has the potential to grow your portfolio like few could in “normal” times.

Roth conversions

Roth IRA conversions are attractive because your funds continue to grow tax-deferred once converted, and you won’t have to take yearly RMDs from Roth accounts. Besides, distributions from Roth IRAs are tax-free if you’re 59½ and you’ve held the account for over five years.

The downside is that a conversion to a Roth from a traditional IRA or 401(k) can trigger a pretty hefty bill for the income taxes on all the untaxed contributions and earnings. And the bump in income could result in higher Medicare premiums due to IRMAA and an increase in the taxes you pay on Social Security.

A bear market offers a unique opportunity to lower the cost of a Roth conversion. The dollar amount you choose to convert represents a more significant number of depreciated shares, so the per-share cost of the tax due is lower. As a result, you have more tax- and RMD-free shares ready to grow in the inevitable market recovery. (Seen differently, the dollar value of a set number of shares is lower, so the tax burden of converting them is lower.)

A major consideration is where you will pull the funds to pay the taxes. Ideally, you won’t have to touch other depreciated shares to do so. You will also want to understand how a Roth conversion impacts your overall financial plan. Here your tax or financial advisor can be a valuable resource.

Dollar-cost averaging

It’s easy to give in to fear when television pundits focus exclusively on the downside, so it seems they provide a safe harbor, maybe even a solution.

But long-term investors often call on a stabilizing technique called dollar-cost averaging. It entails investing the same amount of money on a set schedule – maybe monthly – regardless of market behavior. When prices are high, you will receive fewer shares for that amount. But when share prices are discounted as they are today, your money buys you more shares.

Wherever you are placing that steady investment, the impact is that you are smoothing out the market’s volatility. Compared to investing large amounts infrequently, dollar-cost averaging removes the risk of getting the timing wrong and helps limit your losses when markets are declining.

Tax-loss harvesting

Losses in taxable accounts – such as a brokerage account – can be useful in tax-loss harvesting. (This is not available in tax-deferred accounts like IRAs or 401(k)s because losses cannot be deducted.) In short, you can “bank” capital losses from unprofitable investments – which should be easy to find in a bear market – to pay lower capital gains tax on profitable investments sold during the same year.

Look for positions you would like to sell at a loss to offset capital gains elsewhere, especially among the higher-taxed short-term capital gains. (Remember that only short-term losses can offset short-term capital gains.) Be aware of the annual maximums on capital losses you can use and what you can write off as an individual taxpayer in a given year. The complexity is such that you might want to consult your tax or financial advisor.

One consideration is to avoid getting caught by the wash-sale rule. It requires a minimum of 30 days between selling an asset or security and buying a “substantially identical” one back if you want the sale to be recognized and the loss applicable.

Wrapping up

There can be an upside to a down market for investors who are both disciplined and engaged. The tendency may be to panic, abandon your well-designed plan or put your head in the sand.

Instead, consider putting the opportunities and strategies above to work for you. You will likely want to seek professional help to understand the broader picture, tailor your investments to your risk profile, and ensure that you are not overlooking implications that could affect your long-term objectives.

The 2022 “perfect storm” could be a great opportunity.

Bill Harris is a Retirement Management Advisor® (RMA®), a CERTIFIED FINANCIAL PLANNER™ practitioner (CFP®), a Master Elite Ed Slott Advisor, and author of ‘Inheriting Your Spouse’s IRA’. He is President of WH Cornerstone Investments, a financial advisory firm located in Kingston, MA. Learn more at

This article originally appeared in Old Colony Memorial.

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