2022 has been a good handful for investors. This year has been marked by a ferocious bear market, record inflation, aggressive central banks around the world, Russia’s invasion of Ukraine, the collapse of crypto, a close monetary policy crisis in the UK, and the acquisition of Elon Musk’s Twitter, just to name a few.
As is our annual tradition, we put together financial terms that generate the most above-average interest on Investopedia throughout the year, reflecting market events and headlines. With over 13 million monthly readers and over 25,000 articles on our site, we have a front row seat for the most interesting topics and terms in 2022.
A graph showing financial terms with the highest above-average interest rates on Investopedia in 2022.
- Poison pills
We can thank Elon Musk for the best term of 2022. Poison pills are a colloquial term for a defense strategy used by directors of a public company to prevent activist investors, competitors, or other potential buyers from taking control of a company by buying large amounts of its shares. On April 14, 2022, Musk made an unsolicited offer to buy Twitter for $54.20 per share. 1 Twitter’s board of directors initially responded with a “poison pill” strategy to resist hostile takeovers. Finally, the board relents and Musk catches the blue bird.
This word has been on everyone’s lips in 2022 because sticky inflation is high and rising interest rates are usually a recipe for recession. A recession is defined as a significant, broad-based, prolonged slowdown in economic activity. On April 5, 2022, Deutsche Bank became the first major bank to predict that the US economy would go into recession, and the herd joined soon after. 2 Given current economic forecasts, the term is expected to remain popular in 2023.
- Hostile acquisitions
Another term that came about thanks to Musk and Twitter. Musk’s unsolicited offer to buy Twitter on April 14, 2022 was considered a hostile takeover, referring to the acquisition of the company by another company against the will of the former. In the end, Musk won, despite the risk of the poison pills mentioned above by Twitter’s former board of directors.
- Bear market
Although 2022 is the year of tigers, bears steal the show. Bear markets roam freely, devouring risky assets such as stocks, cryptocurrencies, and even bonds. Many see this happening after a 100% rise in the S&P 500 from 2018 to 2021, but a 20% or more decline in the capital market, a hallmark of the bear market, hurt in the same way. The Dow Jones Industrial Average managed to recover in early December, but the Nasdaq and S&P 500 continued to decline.
- Cold storage
Cold storage and cold wallets became especially popular this year when cryptocurrency investors reacted to the news of a record online digital asset hack. For example, the Binance exchange was hacked in October 2022 for $570 million. 3 Then, on November 11, 2022, cryptocurrency exchange FTX filed for bankruptcy after freezing customer assets. On the same day, more than $600 million was stolen from investors with assets stored in FTX wallets and on exchanges. Cold wallets are digital wallets that are not connected to the internet and are therefore less vulnerable to hacking and crashing online systems. 4
- Federal Funds Rate
The term federal funds rate refers to the target interest rate set by the Federal Open Market Committee (FOMC), and is the rate at which commercial banks borrow and lend their surplus reserves to each other overnight. On June 15, 2022, the FOMC announced that the federal funds rate would increase by 75 basis points, the biggest increase since 1994. It raises the federal funds rate again 75 basis points three times in 2022, and appears to be unfinished. 5 This rate-raising environment is new to many young investors, who are now witnessing how the Fed sets monetary policy and how it affects their own wallets.
Think of capitulation as throwing in the towel. Capitulation in investing describes when a large number of investors succumb to fear and sell in a short period of time, causing the price of a security or market to fall sharply amid high trading volumes. At the start of the day on January 24, 2022, major US stock indexes began with a significant decline that prompted broader concerns about a further market downturn. While the S&P 500 is down as much as 25% from this year’s highs at its lowest point, most investors have never really given up like they did in the bear market before given reports from several online brokers.
Government bonds in the UK, India and several other Commonwealth countries are known as gilts, which are equivalent to US Treasury securities in their respective countries. On September 22, the price of British government bonds, or gilts, suffered its biggest drop since the start of the COVID-19 crisis in March 2020, when then-Prime Minister Liz Truss tried to push the economic agenda of tax breaks amid rampant inflation. 6 He was forced to withdraw his plan and fire his finance minister, and the mistake ultimately cost him his job.
Petrodollars are export revenues from crude oil denominated in US dollars. On February 24, 2022, Russia invaded Ukraine, which contributed to raising the price of crude oil to more than $125 a barrel in the spring. Then, on March 14, the EIA reported that the average price of regular-class gasoline in the United States rose to a record $4.43 per gallon. 7
Inflation is the most important thing and one of our most popular terms throughout the year, especially when the annual inflation rate reaches a 40-year high. Core inflation is a change in the cost of goods and services, excluding the food and energy sectors. Food and energy prices are exempt from this calculation because they can be too volatile or fluctuate wildly, as we see in 2022. On June 13, 2022, the Bureau of Labor Statistics released data on the Consumer Price Index (CPI) for May 2022, which showed that US core inflation continues to hold at levels above the 6% year-over-year change, despite the recent rate hike by the Federal Reserve. At press time, core inflation remained above 6%. 8
There are always a lot of terms that are in the spotlight, or very interesting in general throughout the year that are not in our top ten. Here are six honorable mentions for 2022:
- Inflation: While the extreme price surge that dominated headlines this year made inflation one of the most sought-after terms on Investopedia, it did not outperform its cousin, core inflation, which excludes food and gas prices.
- Money laundering: The collapse of the bankrupt FTX cryptocurrency broker likely sparked interest in this criminal term, especially when we learn of the broker’s bizarre relationship with Alameda Research, a hedge fund it also owns.
- Environmental, Social and Corporate Governance (ESG) Criteria: ESG criteria have always been popular on our site, but probably in 2022 for the wrong reasons. Allegations and investigations into greenwashing by some asset managers have led many investors to question the legitimacy of ESG investments.
- Wash-sell rule: This legal term has always appeared in the bear market, and 2022 is no exception. Investors may be tempted to sell a loss-making stock before the end of the year, take a tax deduction and buy back the stock at a cheaper price within thirty days, but it doesn’t, according to the IRS Laundering Sales Rules.
- Average Cost in Dollars (DCA): One of the golden rules of successful long-term investing is very popular this year, which is always good to see. With bear markets slashing stock prices in several high-value sectors, 2022 has been a good year for investors to continue buying and lower the average price of favorite stocks.
- Inflation-protected treasuries (TIPS): TIPS has several months in the spotlight in 2022, as investors look for any security that can offer the slightest protection against inflation. TIPS serves that goal for several months in 2022 until better yields come across the bond market.