By Ben Carlson
A Wealth of Common Sense
Earlier this year I looked at the worst years ever for the U.S. stock market.
Well, things didn’t get much better from there.
This past year’s 18.1% loss was the seventh worst loss since the 1920s.1
The bond market also had one of its worst years in history. It was easily the worst year ever for the Bloomberg U.S. Aggregate Bond Market Index, which dates back to 1976. The total return of -13% in 2022 was far and away the worst loss ever for this total bond market index.
There has only been one double-digit calendar year loss for 10-Year U.S. Treasuries since the 1920s. That was an 11.1% loss in 2009. Now we have two.
The benchmark U.S. government bond was down more than 15% in 2022, making it the worst year ever for bonds.
Add it all up, and a 60/40 portfolio of U.S. stocks and bonds was down more than 16% in 2022. With both stocks and bonds down big, this ended up being the third worst year ever for a diversified portfolio.
There’s no sugar-coating it — if you had money invested in the financial markets in 2022, it was a tough year, possibly one of the worst we will ever see as investors. I try to look at losses like this as sunk costs. They already happened. You can’t go back and change things now. All that matters is what happens from here, not what happened in the past.
1 I'm trademarking The Great Inflation for 2022 until someone comes up with a better name. Maybe the Fed’s revenge?