1) The last 10 plus years have given investors a relentless stream of events and potential outcomes to be concerned about.
2) We are in a Bear market in 2022. This is defined as above a 20% fall from peak.
The below table is the list of previous Bear markets and how they played out.
3) The bar charts below illustrate the average returns from markets in the following 1, 3 and 5 years after a 10%, 20% and 30% drop in value.
4) The chart below illustrates the valuation of the S&P (US) market since 1997. It currently sits below its average having risen significantly above since 2020.
5) Just an interesting chart to show from where the U.K. imports natural gas.
6) This chart shows a number of metrics to measure the health of an economy and whether any are indicating negatively. The first is the US:
The second chart is Europe.
As you can see with the European monitor there is much greater duress.
A recent speech in the European Parliament summed up the current German situation.
They paid very little for all the energy they needed from Russia. They paid very little for all the defence they needed from the US and NATO.
Neither are now the case. They will need to pay an awful lot for both.
7) The graph below is a 10-year chart of the S&P 500. If you look at the line it is pretty much back to trend after 2020/2021 (COVID).
8) The Breadth graph illustrates as a percentage of all the different asset classes, what sectors are up and down each year. It is usual due to asset classes being uncorrelated (they don’t do the same thing given the same stimulus) that some will be up and some down each year, as you can see. In 2022, everything apart from the dollar and cash is down. Cash though is down in real terms by the inflation rate of its country.
The investment industry standard portfolio for decades has been 60% equities and 40% bonds.
Since 2002 there have only been 3 negative years. The fall in 2022 is the greatest since 1931.
Note: This is written in a personal capacity and reflects the view of the author. It does not necessarily reflect the view of LWM Consultants. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog, and the reader should accept that by its very nature many of the points are subjective and opinions of the author. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.