Market Recap 12/30/2022

Anyway you look at it, 2022 was a tough year for investors.  It isn’t so much that stocks lost money (not that unusual).  Or even that bonds closed in the red (more unusual, but not unheard of).  It’s more that they both went down at the same time.  The chart below from the Financial Times puts this into perspective.  The last twelve months was the worst combination of both stock and bond returns going back to 1871 based on their analysis.


Now of course, any sort of index data before WWII gets pretty sketchy.   But you have to admire the historical scope!!

We are also going to see a lot of the following types of tables in the next few weeks.  Basically, the only asset classes that made money in 2022 were commodities and cash.



What this all meant in real terms is that the typical 60/40 portfolio posted its worst performance since 2008.


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A Few Surprises in 2022

Going into 2022, markets and investors clearly weren’t prepared for how high inflation jumped.  


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In retrospect, we all underestimated how aggressive the Fed would be in trying to put the inflation genie back into the bottle.  This latest rate hike cycle is unlike anything we’ve seen before (just like the monetary and fiscal response to COVID was also unlike anything we’d seen before).


Infographic: The Fed Is Moving Historically Fast to Tame Inflation | Statista


The other major surprise for 2022 was obviously Russia’s invasion of Ukraine in February.  Oil and gasoline prices shot higher in the immediate aftermath of the war, only to fully retrace their run by year’s end.

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The Year of the Crypto Fraud


Now maybe the turmoil in the crypto space wasn’t a total surprise, but it certainly unraveled quicker than most expected.  Many crypto tokens managed to go to zero in 2022, and Bitcoin lost a cool -64% for the year.


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Plunging prices led to an all too familiar chain of events.   In July, a smaller crypto custodian went under….


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…then a much larger player, Celsius, went under and Tether went to $0…


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…the now infamous Sam Bankman-Fried and FTX stepped in to scoop up the assets of Voyager in September…


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…but less than two months later FTX went under in what will probably go down as one of the biggest frauds in history…..


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…and FTX’s implosion wiped out thousands of investors and depositors.  It also took down BlockFi…


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…which all on its own has about 100K creditors and close to 500K clients.      


COVID Surprises


Finally, in 2022 COVID mattered less and less for much of the world. 


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Case counts dropped dramatically, life got back to normal, people started traveling again, and stands at the World Cup were packed (despite the lack of beer).  


Maybe the bigger surprise is how China has handled the situation.   They have gone from stringent lockdowns to a dramatic reopening in the matter of days.  And while the official numbers show few or no cases (depending on the source)….


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…case counts are almost certainly skyrocketing.


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So, what will the surprise be in 2023?   Will China clamp down again?   Or are they too far along the re-reopening path?  If China gets back to business in 2023, what will that mean from global growth, inflation, and commodity prices?   


(Other) Charts We Found Interesting


  1. The bad news is that stocks had the fewest positive days over the past year in more than a decade.  The good news – times like this are fleeting.



  1. Another surprise in 2022 was the Bank of Japan abandoning their yield curve control policy.  They were capping 10-year bond yields at 0.25%.  But in a move that surprised most observers, they increased the cap to 0.5%.  Global bond yields increased as a result.  



  1. Want an argument for why there is better value in the bond market today?  A year ago you paid the government roughly 1% a year to buy an inflation protected bond.  Today you make roughly 1.5% a year.  



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  1. It’s the same story globally.    Negative yielding bonds have all but disappeared.


Alex (xelan) (@xelan_gta) / Twitter


  1. COVID restrictions hammered China’s demand for oil.  Will reopening lead to renewed demand?      


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  1. There’s a lot going on in this table, but basically, the winners of the last cycle don’t win during the next cycle.  


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Happy new year everyone!!

Published by Gemmer Asset Management LLC The material presented (including all charts, graphs and statistics) is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The material is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objective, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this material is suitable for their particular circumstances and, if appropriate, see professional advice, including tax advice. The price and value of investments referred to in this material and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or prices of, or income derive from, certain investments. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of Gemmer Asset Management LLC (GAM). Any mutual fund performance presented in this material are used to illustrate opportunities within a diversified portfolio and do not represent the only mutual funds used in actual client portfolios. Any allocation models or statistics in this material are subject to change. GAM may change the funds utilized and/or the percentage weightings due to various circumstances. Please contact GAM, your advisor or financial representative for current inflation on allocation, account minimums and fees. Any major market indexes that are presented are unmanaged indexes or index-based mutual funds commonly used to measure the performance of the US and global stock/bond markets. These indexes have not necessarily been selected to represent an appropriate benchmark for the investment or model portfolio performance, but rather is disclosed to allow for comparison to that of well known, widely recognized indexes. The volatility of all indexes may be materially different from that of client portfolios. This material is presented for informational purposes. We maintain a list of all recommendations made in our allocation models for at least the previous 12 months. If you would like a complete listing of previous and current recommendations, please contact our office.

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