2022 was an annus horribilis for investors

Research shows bad years tend to be followed by strong gains but there’s little sign of an end to the bear marketThe new year could hardly be any worse than the one just ended for investors. Photograph: Michael Santiago/Getty ImagesMany investors are wary about what 2023 may bring. If it’s any consolation, it could hardly be worse than 2022.

Even accounting for dividends, the S&P lost 18.1 per cent in 2022 – the seventh-worst loss in history, notes Ritholtz Wealth Management’s Ben Carlson. US government bonds tumbled more than 15 per cent, ensuring the worst year in history for bonds. The end result was a 60/40 portfolio of stocks and bonds fell more than 16 per cent – the third-worst year ever for a diversified portfolio.

Traders who actively followed market fortunes endured a particularly stressful year. All-Star Charts’ Willie Delwiche notes 48 per cent of trading days saw the S&P 500 swing at least 1 per cent. Almost all days – 92 per cent – saw more stocks hitting new lows than new highs. Going back five decades, says Delwiche, that was an “unprecedented combination of volatility and weakness”.

The good news: bad years are usually followed by good years. CFRA Research’s Sam Stovall looked at all 21 down years since 1945 and found the S&P 500 averaged gains of 14.2 per cent the following year. Still, that doesn’t mean things will necessarily ease up any time soon. As Delwiche tweeted: “New week. New month. New year. Same bear market.”IN THIS SECTION

Source: News Formal (newsformal.com)

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