Below is a table of 17 categories of investments (i.e., asset classes). The shaded categories lost investors money in the given year.
Most of you will never forget 2008. It was a horrific year for financial markets — the worst since the Great Depression. Stocks, real estate*, commodities, high-yield bonds, and even some conservative bonds lost money. Former Secretary of the Treasury, Tim Geithner, said that by September 2008, we were days away from rioting in the streets — paychecks wouldn’t clear, ATMs wouldn’t work, etc. But even in a year as frightening as 2008, four of the 17 asset classes above still earned investors money.
2018 didn’t feel anywhere near as bad as 2008, because it wasn’t. In fact, until early October, the U.S. stock market was having yet another good year, up 11%. But during the fourth quarter, everything soured. The table below shows it clearly — all of the 17 asset classes lost money in 2018.
In 2018, nothing was horrible, but everything was lousy. It is frustrating, but it is inevitable. Pervasively bad results will happen. Knowing this is unpleasant, but useful. (And such knowledge is easier to digest after this year’s market recovery.)
It reminds us: Think long term. Think slowly. And Invest Calmly.®
*Real Estate is defined as Real Estate Investment Trusts (REITs).