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.
P.S. Don't LET YOUR FRIENDS MISS OUT. Share this article:
As Chief Operating, Investment, and Compliance Officer, Kristi is responsible for the firm’s investment offerings, client service, operations, and compliance. She and her team are focused on delivering ever greater value to our clients through outstanding service, diversified investment offerings, and easy-to-use technology.
Kristi joined Merriman in January of 2016 as a research analyst. In that role and later as Director of Research, she has been actively involved in launching several new funds in collaboration with Dimensional Fund Advisors, the widespread adoption of asset location across client accounts, and centralizing trading and portfolio management functions.
Prior to joining Merriman, Kristi spent 18 years as an engineer and project manager in the aerospace field working on satellite propulsion systems. In recognition of her contributions to the field of electric propulsion, she has won several national awards and been granted multiple patents.
Kristi has a bachelor’s degree in physics and mechanical engineering from Yale University. A Washington native, Kristi and her husband have two children and the family enjoys birdwatching, running, cooking and traveling.
Articles Straight to Your Inbox
Subscribe to Merriman's Envision Newsletter to receive in-depth articles and expert commentary, delivered monthly to your inbox:
"*" indicates required fields