It's not an easy time to be a stock investor.
The S&P/ASX 200 Index (ASX: XJO) is down almost 5% for the year. Overseas, it's even worse with the S&P 500 Index (SP: .INX) plunging an ugly 13.9% so far in 2022.
And many experts, like AMP Ltd (ASX: AMP) chief economist Dr Shane Oliver, reckon there are more drops to come.
"Shares are yet to see clear signs of a wash out bottom, with VIX and put/call ratios yet to reach levels seen at past major share market bottoms," he said on the AMP blog.
"There is still risk of more downside in the short term."
So anyone with a stock portfolio is now asking: When will the pain end?
While no one has a working crystal ball, one expert stuck his neck out recently and revealed his best answer:
Market to 'get worse before it gets better'
Wilson Asset Management portfolio manager Matthew Haupt also agrees that share markets will "get worse before it gets better".
He explained how a previously inflated market had to endure two waves of bad news.
"The sell-off in equities we're seeing now has been a function of interest rates going higher… that's phase one," he told WAM Vault Live in Sydney.
"Phase two is an earnings slowdown, which we're seeing now, which is demand destruction through inflation."
But Haupt sees a light at the end of the tunnel.
"The end of this year, we can start to get a lot of optimism around the scenario we'll be facing," he said.
"The [US Federal Reserve] would have hiked [interest rates], and they would have paused."
Oliver also had a similar timeline in mind for the market turning from its bearish outlook to at least a neutral stance.
"The bottom line is that while we remain optimistic that recession will be avoided in the next 18 months [or] so, and therefore believe shares can rise on a 6- to 12-month view."
'A terrible recipe' for ASX shares
But before the year is over, both Haupt and Oliver warned investors would have to grit their teeth through tough times.
"Rising oil and hence petrol prices are a fly in the ointment of the 'peak inflation' view and commodity prices generally still look strong," said Oliver.
"Even if US inflation has peaked it will take a while before it falls back to levels where the Fed can relax."
Haupt said that before optimism returns at the end of the year, the economy will deliberately wind down.
"Central banks are hiking into a slowdown, which is a terrible recipe for risk assets."
"Things are dire at the moment. But we've been through these cycles before. We know how they play out."
For Haupt, the southern spring will be crucial for ASX shares.
"We're really looking for that next inflection, which I think will be when interest rates are put on hold," he said.
"You're starting to get some clues now… [US Federal Reserve chair Jay] Powell said in the minutes around September."
