After the pandemic years, people would have thought that little could surprise them, however, few could have predicted what 2022 would have in store for the world. The performance of various asset classes is no different.
Uncertainty seems to be the only constant after Russia invaded Ukraine, with rising global inflation and shifting monetary policies. Companies and their shares seem to be behaving peculiarly, yesterdays outperformers are todays markets biggest losers.
Founder and CEO of Compound Capital Advisors, Charlie Bilello shared an interesting table that shows the total returns of asset classes for each year going from 2011 until today.
Notably, just two asset classes are up in the green year-to-date (YTD) in 2022, gold 5.5% and commodities 30.7%, respectively.
Outlook darkened dramatically
Deutsche Bank analyst, Henry Allen in his latest research note states that the global outlook has darkened considerably. Inversion of the yield curve coupled with other mentioned global shocks simply doesn’t leave too much space for optimism as the research note infers.
Trends have seemingly turned amid the recovery from the pandemic and in a new world where commodity markets have been shaken up by the war in Eastern Europe. The 20 best performers in the Russel 1000 index, an index representing the largest 1,000 companies from the Russel 3000 index, on average lost 22% so far.
Of the 20 stocks in the Russel 1000 that saw the worst performance leading up to 2022, a majority of them saw gains this year. This basket of the worst performers betas some popular stocks like Apple (NASDAQ: AAPL) or Tesla (NASDAQ: TSLA) in terms of performance in 2022.
Technology-focused Nasdaq has lost over 14% this year where stocks at the top and bottom are suffering equally, it’s worth noting that Nasdaq is currently in correction territory. Rising interest rates may worsen the situation for tech stocks.
Worst start of the year
Asset classes across the board performed poorly and when a year like 2022 happens there is seemingly no place to hide. 2022 is deemed as the fifth-worst year for stocks going back from 1926.
This is a challenging year for markets since there is no way for market participants to know where the year will end, the only solace that can be had is that volatility could be the only sure thing.
It is not fun to see a portfolio lose its value across numerous asset classes, but over the long-term investors have usually seen good returns where good years outweigh bad ones.
Looking forward to better times could be the only thing along with staying in the market and not selling at a loss that can help investors sleep at night in 2022.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.