• Home
  • About
  • Services
  • Contact
  • Media

2022 Review: Significant Events and Major Asset Classes

Posted January 9, 2023 by Denis Smirnov

To say that 2022 was an eventful year would be a huge understatement. Sky-high inflation and attendant aggressive interest rate hikes, war in Ukraine and U.S. midterm elections are just the start.  I tried to highlight notable events in various arenas in Exhibit 1. In Exhibit 2, I tie some of the news stories to the stock market. It shows the weekly % changes in the S&P (green and red bars) and the level of the index (black line).  The annotations are the major stories of the year that [could have] affected the markets.

Lest you think that absolutely nothing good happened in 2022, here is a list of amazing scientific breakthroughs from last year.

Exhibit 1 – Notable events in 2022

Exhibit 2 – 2022 S&P 500 Timeline

So what was the result of all these unfortunate events? Exhibit 3 shows 2022 performance for major asset classes and it ain’t pretty. There were few places to hide, with only the dollar and oil positive. Gold was basically flat which is an accomplishment in this environment. Crypto currencies had a terrible year with Bitcoin off 65%. Stocks of all types were down 15% or more. Growth stocks represented by Nasdaq were crushed by 33% (although their longer term numbers still trump everything else). Perhaps the most difficult to process was carnage in fixed income with all manner of bonds off by double digits.

Exhibit 3 – 2022 Performance for Major Categories

Let’s also look at detailed fixed income universe breakdown (Exhibit 4). Long-term bonds, which are the most sensitive to Fed’s interest rate hikes, dropped by 30-40%. And those are U.S. Government Treasuries, not some junky securities! International bonds also had a terrible years due to combination of rising rates and strong dollar. Short term bonds had the smallest declines as did Senior Loans (which pay adjustable rates).

2022 was a truly horrible year for bonds, by far the worst since Bloomberg U.S. Aggregate Bond Index was launched 46 years ago in 1976 (Exhibit 5). Second worst was -2.9% in 1994, so -15% is quite abnormal. Moreover, while bonds tend to offset large drops in stocks (indeed that is why we have them in portfolios as ballast), it failed miserably last year. Ben Carlson had a nice post putting stock, bond and 60/40 portfolio returns in historical perspective and looking at what it might mean for future performance.

Exhibit 4 – 2022 Performance by Fixed Income Groups

Exhibit 5 – Bloomberg U.S. Aggregate Bond Index Annual Returns

 

In the next post, I will take a closer look at sector and stock performance.

Share this:

  • Facebook
  • LinkedIn
  • Twitter
  • Pocket
  • Email

Sign up to the newsletter

Categories

  • Bear Markets
  • Bonds
  • Economy
  • Education
  • Financial Planning
  • Indexing
  • Investing
  • IPO
  • Retirement
  • Taxes
  • Uncategorized
  • Valuation

Archives

  • January 2023
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • May 2022
  • April 2022
  • February 2022
  • January 2022
  • October 2021
  • September 2021
  • July 2021
  • February 2021
  • January 2021
  • November 2020
  • October 2020
  • September 2020
  • July 2020
  • June 2020
  • May 2020
  • March 2020
  • February 2020
  • January 2020
  • November 2019
  • October 2019
  • September 2019
  • July 2019
  • May 2019
  • February 2019
  • January 2019
  • December 2018
  • October 2018
  • September 2018
  • July 2018
  • June 2018
  • May 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • October 2013
About
  • Background
  • Who We Are
  • The Gordian Knot
Services
  • Services
  • Planning Process
  • Investment Philosophy
Contact
  • Contact Details
  • Inquiry Form
  • Map
Media
  • Articles
  • Blog
  • Reviews
Dave
Denis
 
 
 
 

Gordian Advisors Financial Planner

Office: 2200 E. River Rd., Suite 109, Tucson, AZ 85718

Phone: 520-615-2779

Email: info@gordianadvisors.com

Download Form Form CRS Client Relationship Summary

Download Form ADV Disclosure Brochure

Gordian Advisors may only transact business or render personalized investment advice in those states where we are registered, or have filed notice, or are otherwise excluded or exempted from registration requirements. Material discussed is meant for general illustration and/or informational purposes only, and is not to be construed as investment advice. Nothing on this web-site should be interpreted to state or imply that past results are an indication of future performance. Although this information has been gathered from sources believed to be reliable, please note that individual situations may vary. Therefore, any information should be relied upon only when coordinated with individual professional advice.