Three years of less-than-stellar financial market performance.
It’s been a tough slog for investors over roughly the past three years, with most corners of the market offering little to nothing in the way of gains. Over that period, of course, interest rates have soared, corporate earnings have been stagnant overall, and valuations have fallen.
Consider that, since December 31, 2020:
- Bonds are down a whopping -16.5%.
- A balanced global portfolio of 60% stocks/40% bonds is down -5.4%.
- Global stocks are up a mere 6.1%—and, as seen in the chart, it’s been a rough ride to get there.
Financial market gains have been exceedingly tough to come by over the past few years, regardless of how you’ve invested among traditional asset classes. The brutal downturn seen in 2022—the worst year for stocks since 2008 and the worst year on record for bonds—has meant that many asset classes are still trying to claw their way out of a historically deep hole. In particular, relatively conservative or “balanced” investors have taken it on the chin, as bonds’ significant underperformance has actually exacerbated equity market declines rather than offset them.
Of course, market weakness over short periods, such as two or three years, is common. What’s more, the robust economic growth numbers we’ve seen lately (e.g., nearly 5% GDP growth in the third quarter and strong consumer spending) could set the stage for a substantial upswing in the coming months as more investors appreciate the economy’s continued resilience.
Disclosures
This commentary is written by Horizon Investments’ asset management team.
Past performance is not indicative of future results.
Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security. This report does not attempt to examine all the facts and circumstances that may be relevant to any company, industry, or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice, or recommendation in this document, clients should consider whether the security in question is suitable for their particular circumstances and, if necessary, seek professional advice. Investors may realize losses on any investments. The Bloomberg Aggregate Bond Index is a broad base, market capitalization-weighted bond market index representing intermediate-term investment grade bonds traded in the United States. The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries. Bloomberg US EQ:FI 60:40 Index is designed to measure cross-asset market performance in the US. The index rebalances monthly to 60% equities and 40% fixed income. Reference to an index does not imply that any account will achieve returns, volatility, or other results similar to that index. An index’s composition may not reflect how a portfolio is
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