The Day To End All Days (Of 2022)

This year was certainly one to remember, particularly for new investors who haven’t seen this type of market environment before. But before we all ride off into the sunset and drink away the pain of 2022, let’s review how some of the major asset classes and sectors performed. 🍸

First, let’s start with the traditional 60/40 stock/bond portfolio.

The chart above from LPL Research shows that this was one of the worst years for this ‘conservative’ portfolio approach, as stocks and bonds suffered significant losses. With that said, it also shows that there are far more positive than negative years and falling prices tend to improve forward returns.

However, we’ll have to wait and see if the end of the four-decade-long bond bull market impacts that historical tendency. 🤷

Next, let’s take a look at a list of many significant assets using Finviz’s futures chart.

And the winner for 2022 was…Orange juice. After that, it’s heating oil, rough rice, natural gas, and many other commodities. Oh, and the U.S. Dollar and Volatility Index (VIX).

So, where are stocks on this list? Not a single global equity index is in the green on this list, with the first being the Dow Jones Industrial Average leading the pack by losing just 8.02%. The same goes for bonds, which had a rough year around the globe. 🔻

As we can see, unless you had commodity exposure or sat in U.S. Dollars, chances are you felt some pain in your portfolio in 2022. As for 2023, the multi-multi-billion dollar question remains whether 2022 was the start of a new commodity supercycle. Or if it was an anomaly that investors should bet reverts back to its mean. 

We’ll let y’all decide that one for yourself… 👍

Lastly, let’s check on U.S. sector performance using a chart from Koyfin.

Given the strength in commodities, it’s unsurprising to see energy topping the list with a whopping 64.40% gain. After that, it’s followed by the defensive ‘risk-off’ sectors of utilities, consumer staples, and health care, which all finished marginally on either side of 0% for the year. 🛡️

Not included in the defensive sectors this year is real estate. Typically a higher-yield vehicle, it fell with other rate-sensitive sectors like communication services and consumer discretionary. The Fed aggressively hiking rates and changing work trends pressured the industry’s assets/valuation. 🏢

The theme for 2022 throughout the economy was one of ‘real assets’ over ‘financial assets.’ And that’s reflected in the S&P 500’s sector performance as well.

International stocks and assets are a whole other can of worms, so we’ll leave those for another day. For now, just take our word for it…they didn’t fare much better. 😂 

Last year, Chinese officials began looking to crack down on mainland clients using offshore trading services. Many believed New York-listed Futu Holdings and UP Fintech Holdings would face regulatory risks because they lack licenses in China. 🚨

Unfortunately for investors, that risk has come to fruition. Today, China’s securities regulator banned the companies from opening new accounts with mainland Chinese investors.

The new rules will allow existing customers to continue trading. However, brokerages will have to take corrective measures to prevent money from mainland clients from entering their platforms.  In short, no new money can unlawfully flow into their accounts. 

The news comes just a day after Futu delayed its listing plan in Hong Kong, stating it was “clarifying certain matters” with the Hong Kong Stock Exchange.

Today’s ban hits $FUTU‘s business particularly hard, given its 2020 annual report said that a large number of its clients were mainland Chinese citizens. The company’s shares are down roughly 31% today, erasing all their year-to-date gains. 📉

Meanwhile, shares of UP Fintech Holdings ($TIGR) are down 28%. 🔻