Stock value of Minnesota's largest companies dropped nearly 12% last year

There was nowhere to hide from the 2022 carnage in the stock and bond markets. And Minnesota was no different from the national markets.

The Piper Sandler-Minnesota index of the state's 50 largest public companies declined by 11.9% last year, compared with the 20.4% loss of Russell 2000 index smaller-company stocks and 17.9% loss for the S&P 500 index of the nation's largest companies.

Fewer than 15 of Minnesota's 77 publicly traded companies posted positive returns last year — and for the past three years.

"Most of our clients have been around long enough so they've seen times like these before," said Biff Robillard, president of Wayzata's Bannerstone Capital. "We mostly play defense in bear markets. Stocks are down. It's not a reason to get discouraged and do something stupid.''

Financial advisers are urging nervous clients to avoid bailing while the market is down.

A year ago, market sentiment was frothy and returns were around 20%, including dividends. The market peaked on Jan. 3, 2022. It's been a bumpy, downhill ride since then.

The S&P 500 was down 27% from peak to bottom during a particularly volatile year that beleaguered stock investors. And bonds plummeted in value, partly because of the Federal Reserve's aggressive interest rate hikes to try and quash inflation last year.

The 2022 stock market swoon returned the stock market to early-2021 levels.

Robillard believes the stock market will revive in 2023.

"We tell some people with cash to reallocate some [into stocks]'' he said. "I believe the market will be up by April. If not, so what. We'll get through this wobble. The market favors long-term investors. Don't sell on emotion at times like this when stocks have bottomed."

The people who did the best following the 50% market decline during the Great Recession of 2008-09 stayed the course, as the S&P 500 rose from 800 to 4,800 by 2021. Many took gains along the way.

Of course, investors also shouldn't risk cash they may need in the next few years in the stock market. That should be in money market funds or a savings account.

Most Minnesota stocks have risen in value over the last three to five years. But 2022's retreat was painful and cut into those gains.

The best-performing stocks in 2022 included Canterbury Park Holding, Northern Oil and Gas, Digi International and Clearfield.

Shakopee-based Canterbury Park, which operates the horse-racing business, rose more than 80% in market value last year and 154% since 2020. The company, which posted record operating results in 2022's first nine months, also benefited from speculation that Minnesota will legalize sports betting in 2023. Canterbury already operates a limited-wager casino.

Northern Oil & Gas, which operates in North Dakota and Montana, had a total return of 54% during the 2021-22 run-up in energy prices.

Clearfield, maker/installer of fiber-optic cable and broadband services essential to the digital economy, was up 11.5% last year and 575% since the start of 2020. Brooklyn Park-based Clearfield has increased in value from $13 per share to $94 over the last three years.

Digi, which makes devices that connects all kinds of equipment to the internet, rose 49% last year and 107% since 2020.

Resurgent General Mills was up 28% last year and 74% since 2020.

The number of Minnesota stocks that fell in 2023 far outnumbered the winners with 12 of them down more than 50%. We've cut our list of losers short by excluding stocks under $2 a share. Some big Minnesota names dropped below that threshold. Those persistently trading under $1 a share received delisting warnings from their exchanges.

Some of these companies are hoping for a Minnesota Vikings-style comeback.

One of the big local names getting a delisting warning was Bloomington-based Bright Health. Others include Calyxt Inc., iMedia Brands, Panbela Therapeutics, Predictive Oncology, SharpLink Gaming and Regis Corp., which has a delisting notice for stockholder-equity criteria.

While most analysts believe both stocks and bonds will do better next year, there are wild cards, including inflation, energy prices, the Russian war on Ukraine and corporate earnings, which are projected to rise at this point.

A group of local investment professionals at the Star Tribune's annual Investors Roundtable on Dec. 5 predicted the stock market would bounce back in 2023, growing between 7% and 15.5%.