After the sharp sell-off in stocks, bonds, real estate and most other major asset classes this year, many investors will be asking hard questions about their portfolios.
Even for conservative investors it isn’t a question of if they lost money, but how much despite recent rebounds. Money managers have plenty of exogenous events and macroeconomic factors to point to to help explain this: the war in Ukraine, soaring inflation, a European energy crisis, a global slowdown, not to mention the lingering supply chain impacts of Covid-19, a soaring dollar and rising geopolitical tensions. There’s a long and all-too-familiar list of “who could possibly have imagined” reasons.
Likely to be missing from this summer’s discussions, though, will be any mention of 2021. Consumed by this year’s challenges, we’ve all but forgotten the wild excesses that preceded them: the retail investor frenzy that drove up obscure stocks such as GameStop to extreme heights, how some $18tn of bonds were trading at one stage with negative yields, the rush to invest in blank-cheque Spac investment vehicles. Remember dogecoin, a cryptocurrency designed as a joke that surged 15,000 per cent before crashing?