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This past year was disappointing for stock and bond investors. The real (inflation-adjusted) 25% loss in stocks was in the bottom decile and the real 20.3% bond loss is the worst in the past 97 years. Greater losses lie ahead.
The two histograms and the table below provide perspectives on stock and bond performance in 2022.
Stocks, as measured by the S&P 500, lost 18.6% which is a 25% real (inflation adjusted) loss, placing 2022 in the bottom decile of stock returns over the past 97 years:
Bonds, as measured by the Vanguard Total Bond Index, lost 13.7%. This is -20.3% inflation adjusted, making it the worst annual bond return in the past 97 years.
The following table shows stock, bond, T-bill and inflation for the full 97 years and broken out by quinquennial and decade. The current quinquennial and decade have been the worst for bonds, losing 0.5% per year over the past five years and earning only 1% per year over the past decade. Bond losses in 2022 were the worst over the past 97 years.
Conclusion
