After several years with huge stock market gains, many investors might be hopeful that 2022 will bring back the feeling of déjà vu.

Do not count on it. Future performance can’t be forecast with absolute certainty. However, financial advisors believe that the returns they have earned will return to Earth.

Shon Anderson is a certified financial planner and president of Anderson Financial Strategies, Dayton.

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This year’s totals are: S&P 500 Index — a broad measure of how U.S. companies are faring — has posted a total return (price gains plus dividends) of about 29.2%. It follows 18.4% in 2020, and approximately 31.5% for 2019, with a loss greater than 4% in 2018. This annual average fluctuates between 10% and 15% over time.

The Dow Jones Industrial AverageThis year, has seen a 21.1% total return (compared to 9.72% in 2020) and approximately 25.3% in 2019, respectively. There was also a 5.6% loss in 2018. Technology-driven Nasdaq Composite indexMeanwhile, the meanwhile has recorded a 23.2% rise so far this year after 42.9% in 2020 (and about 36.7%) and a loss in 2018 (2.84%).

While 2022 may end with lower returns — i.e., single-digit gains, perhaps — the economy is expected to continue to expand, albeit at a slower pace than earlier in the year. In the third quarter, gross domestic product — which measures all economic activity — grew at an annual pace of 2.3%, according to the Bureau of Labor Statistics. It follows 6.5% growth annually in the second quarter and 6.4% in quarter one.

With slower growth and persistent inflation as backdrops, along with the Federal Reserve’s current expectations about interest rate rises next year, it is possible for certain market segments or industries to outperform other markets. 

“The environment is right for being more cautious and defensive … but there are still opportunities to make money,” said CFP Matthew McKay, an investment analyst with Briaud Financial Advisors in College Station, Texas.

McKay explained that utilities, healthcare, and consumer staples are often in an environment that outperforms, overall speaking.

International stocks — in  both developed markets and emerging markets — also may outperform, he said.

McKay explained that looking at the second-half of the year shows many countries showing growth year over year. This would be very good for the two large markets because they have reasonable multiples.

Anderson stated that real estate investment trusts may also be more successful than the wider market. As REITs are known, they own or manage properties like office buildings, malls, apartments complexes, warehouses, and shopping centers. 

“Reits have more opportunities in self-storage, data center, and healthcare than they do for other REITs. [facilities]Anderson agreed. 

Joseph Veranth is chief investment officer at Dana Investment Advisors and portfolio manager for Dana Investment Advisors. He said that stocks related to residential construction could be another area of strength. 

Veranth noted that “there is still huge pent up demand for housing.” Veranth’s top picks include homebuilder D.R. HortonAnd Fortune Brands Home & SecurityThe company’s products are related to home security, plumbing and cabinetry.

CFP Barry Glassman is the founder and president at Glassman Wealth Services, Vienna, Virginia. He believes that industrial stocks could also be benefited by a strong economy, as well as more money being spent on infrastructure and defense. This sector generally includes companies that manufacture or distribute products used in industries like construction, engineering and defense. They may also be involved in transport and logistics services.

Additionally, Glassman said, his firm is focusing on total shareholder return — that is, looking at stocks with consistent dividend payouts, as well as stock buybacks. This causes the share price of a company to increase because there are fewer shares on the stock market after a buyback occurs.

“I can’t imagine the S&P continuing its impressive three-year run but even if the index doesn’t do as well, I think there are stocks that could do better,” Glassman said. Stability and profitability will prevail, according to Glassman.