{"id":3360,"date":"2023-02-02T13:35:00","date_gmt":"2023-02-02T20:35:00","guid":{"rendered":"https:\/\/madisonpoole.com\/?p=3360"},"modified":"2023-02-03T11:08:53","modified_gmt":"2023-02-03T18:08:53","slug":"on-the-mark-3-takeaways-from-2022-from-assetmark","status":"publish","type":"post","link":"https:\/\/madisonpoole.com\/on-the-mark-3-takeaways-from-2022-from-assetmark\/","title":{"rendered":"On the Mark: “3 Takeaways from 2022” – from AssetMark"},"content":{"rendered":"

Hello friends! We know that inflation is in the news and on your mind. Please review the latest update from Assetmark regarding this important topic and feel free to call if you have any questions. As always, here to help! ~ The Madison Poole Crew<\/em><\/strong><\/p>\n

Key takeaways<\/h5>\n

\u2022\u00a02022 was an exceptionally bad year as inflation and higher interest rates wreaked havoc on markets.<\/p>\n

\u2022\u00a02022 is the only time in history where stocks and bonds each fell by more than 10% and even traditional inflation hedges failed to protect portfolios.<\/p>\n

\u2022\u00a0Looking ahead to 2023, the singular focus on inflation will likely shift to growth and likely bringing new surprises for investors.<\/p>\n

Last year was an exceptional year, and not in a good way. There was no shortage of worries during the year from COVID-19, the Ukraine war, and the most central story of all: inflation and interest rates. In this edition of On the Mark, we identify the impact of inflation on markets and whether investors should expect more of the same or changes in 2023.<\/p>\n

Stocks and bonds fell 10% for the first time on record<\/h5>\n

In 2022, the Federal Reserve (Fed) switched its narrative from transitory inflation to one committed to taming the inflation beast. The Fed raised interest rates seven times from 0.0% to 4.25-4.5% in merely 10 months. This surge in interest rates hurt both stocks and bonds. Stocks, as represented by the S&P 500 index, fell 18.1%, its worst year since 2008 and the sixth worst on record. Meanwhile, bonds, as represented by the Bloomberg US Aggregate index, had its worst year since the inception of the index in 1976, falling by 13.1%*.<\/p>\n

Losses in stocks are not new. Losses within bonds are less common but also have occurred previously. What made 2022 unique is how sharply stocks and bonds fell simultaneously. Last year was only the sixth time since 1926 that both the S&P 500 and Bloomberg US Aggregate declined. What\u2019s truly remarkable is that it was the only time in history where both stocks and bonds each fell by more than 10%, as seen in the below chart.<\/p>\n

\"\"
\nSource: Ned Davis Research. The 22 charts of 2022.<\/small><\/p>\n

Boring was beautiful<\/h5>\n

While it was a hellish year for stocks, not all stocks fared the same. Over the past decade, fast-growing technology companies dominated returns when compared to those of more \u201cboring\u201d companies. That trend reversed course sharply in 2022 as investors were more focused on companies that made goods and have shown resiliency through varied economic cycles. The Nasdaq index, often synonymous with technology stocks, fell 32.5%, while the blue-chip stocks listed on the Dow index fell 6.9%, marking a difference of nearly 26%. It\u2019s not that technological innovation is no longer valuable, but many of these companies were priced for perfection, and higher interest rates called into question earnings potential for many of these companies that were still years away from profitability.<\/p>\n

Traditional inflation hedges did not work either<\/h5>\n

Last year wasn\u2019t challenging for only stocks and bonds. It also was a surprisingly challenging year for investments that were considered inflation hedges. Real estate, gold, and even bonds aimed at protecting against inflation, known as Treasury Inflation-Protected Securities (TIPS), all lost money in 2022**. Even claims of cryptocurrency as an inflation hedge proved false. Bitcoin was down 75% from its peak toward the end of 2021***. Except for commodities, there was no place for investors to hide.<\/p>\n

Looking ahead to 2023<\/h5>\n

In 2022, the only thing that mattered to markets was inflation and the Fed\u2019s focus on taming the inflation beast. This singular focus will shift in 2023 from inflation to growth since inflation has likely peaked and is falling, and the economy is slowing.
\nFor riskier investments like stocks, even if the economy avoids an official recession, profit growth for companies likely will slow in 2023. Additionally, stock investors probably will become more focused on which companies can better weather that slowdown, a continuation of the trend we saw in 2022. However, while caution is warranted, economic uncertainties should not be used as a market timing tool. Markets are forward-looking and will likely bottom before the worst of the economic news is over.
\nBonds, on the other hand, are unlikely to repeat the carnage of 2022. Higher starting yields should provide a better buffer from additional rate hikes. In fact, investors finally have reasonably attractive opportunities within bonds as they wade through continued uncertainty.
\nFinally, 2022 was a reminder of the importance of having a well-thought-out financial plan. It is a reminder that no matter how good or bad any single year proves to be, it should not derail one\u2019s investment goal. Investing is a multi-year process and should accommodate even an exceptionally bad year. To that end, good riddance to 2022. Be glad it\u2019s behind us.<\/p>\n

Sources:
\n* FactSet
\n** Gold represented by Bloomberg Sub Gold; Real Estate represented by S&P 1500 Equity Real Estate Investment Trusts
\n*** Coindesk<\/p>\n[panel style=”default” text_align=”left”]AssetMark, Inc.
\n1655 Grant Street
\n10th Floor
\nConcord, CA 94520-2445 800-664-5345<\/p>\n

AssetMark is not an affiliate of OneAmerica Securities and is not a OneAmerica company.<\/p>\n

Important Information
\nThis is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information in this report has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.
\nInvesting involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation. It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Index performance assumes the reinvestment of dividends.
\nInvestments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange-traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.
\nBloomberg\u00ae and the referenced Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, (collectively, \u201cBloomberg\u201d) and are used under license. Bloomberg does not approve or endorse this material, nor guarantees the accuracy or completeness of any information herein. Bloomberg and AssetMark, Inc. are separate and unaffiliated companies.
\nAssetMark, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission.
\n\u00a92023 AssetMark, Inc. All rights reserved. 105189 | C23-19534 | 1\/2023 | EXP 1\/31\/2025<\/small>[\/panel]\n","protected":false},"excerpt":{"rendered":"

Hello friends! 2022 was a challenging year, we wanted to highlight a few things in this 2022 Year in Review from Assetmark. As always, here to help! The Madison Poole Crew<\/p>\n","protected":false},"author":3,"featured_media":3363,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/posts\/3360"}],"collection":[{"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/comments?post=3360"}],"version-history":[{"count":4,"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/posts\/3360\/revisions"}],"predecessor-version":[{"id":3366,"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/posts\/3360\/revisions\/3366"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/media\/3363"}],"wp:attachment":[{"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/media?parent=3360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/categories?post=3360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/madisonpoole.com\/wp-json\/wp\/v2\/tags?post=3360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}