Pro Perspectives 12/22/22
Historical Data Suggests Strong 2023 Rebound After Rare 60/40 Portfolio Decline
Pro Perspectives · Bryan Rich · December 21, 2022
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December 22, 2022
We are nearing the end of the year, with a negative return for stock investors. And a negative return for bond investors.
Remember, we looked at this chart below back in October, for perspective on how this year compares to history.
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As you can see, it has been an outlier year for the the trusty 60% equity/40% bond portfolio. The only good news is that it has improved since October (when I made this chart) — now down 23%. It's no longer the worst year on record.
Let's take a look at how stocks have fared, historically, coming out of years that have shared the following two features: a negative 60/40 return, contributed to by a negative annual return for both stocks (s&p 500) and bonds (t bond).
It's a small universe. It happened four times, dating back to 1929.
>It happened in 1931. That was followed by a negative return year for stocks (down 9%) and a positive return year for bonds (up 9%).
>It happened in 1941. That was followed by a positive year for stocks (up 19%) and a positive year for bonds (up 2%).
>It happened in 1969. That was followed by a positive year for stocks (up 4%) and a positive year for bonds (up 16%).
>It happened in 2018. That was followed by a positive year for stocks (up 31%) and a positive year for bonds (up 10%).
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