Quarter in Review: Q4 2022 Market Update

History only gets written after the fact, but at this moment, it feels like the bear market of 2022 will be one that is remembered and studied for many years to come. The abysmal performance of bonds was most noteworthy with the primary U.S. bond benchmark index posting its worst decline since inception, falling 13% for the year. To pile on, global stocks were down 18%, marking the first time in 50 years that both bonds and stocks have fallen in a calendar year.

Only time will also tell us whether 2022 will mark the beginning of a decadal change from an era of falling rates and rock bottom interest rates when growth stocks and long-term bonds seemed to go in only one direction. But in the short term, investors who seemingly ignored the ever-growing interest rate risk for fear of missing out were dealt a serious blow with long-term government bonds down 31% and U.S. growth stocks falling 29%. With minimal exposure to these assets, many of our portfolios were able to deliver better returns than their benchmarks.

There is much uncertainty going into the year ahead, and that likely means continued volatility. 2022 reminded us that volatility can take many forms, not just wild swings day to day, but months of up followed by months of down. But we do know that with each passing month of down markets, investor expectations become more pessimistic, and it becomes easier to exceed expectations and for a rebound to be sustained over the long term. Our goal is to be positioned to capture that growth when it happens.

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always please remember investing involves risk and possible loss of principal capital and past performance does not guarantee future returns; please seek advice from a licensed professional.