A Tough Equity Market Paired with a Historic Bear Market in Bonds Makes for a Uniquely Bad Year for Most Investors: Market Commentary from Cabana’s CEO – May 11, 2022

2 years ago

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Equity and bond markets continue to swing wildly, with the ultimate outcome thus far this year ending to the downside. I just read that the S&P 500 is experiencing the worst start to an overall negative year since 1962. Add to that a historic bear market in bonds going on at the same time and you have something uniquely bad for investors of most types. We have tried over the past weeks and now months to provide objective information so that our advisor partners and clients can make good decisions, but the fact remains that this is a tough environment. We have provided links below to some of our most recent market commentaries in the event you haven’t already seen it. As a professional that has been doing this for nearly 20 years, this is the most difficult I have seen. The good news is that those who live to fight another day will emerge stronger as investors and (in our case) as asset managers. While this is cliché, I believe it to be true. 

This morning we got last month’s CPI numbers and unfortunately inflation remains at or near 40-year highs. This will likely continue to put upward pressure on bond yields and create more difficulties for stocks. It seems to me that we are now being asked to pay a very hefty tab for the extraordinary accommodation provided during the pandemic. The reality is that there is no free lunch in this world, and as I see it we were handed out a lot of free lunches over the past two years. We are in a process of normalization, and it may take a while. Technically the broad equity indices have all broken through lows earlier in the year and have dropped double digits in a matter of a few short weeks. Bearish conditions appear probable going forward. A sharp rally is possible over the coming days simply due to the extent of the losses over such a short period of time, but until significant technical progress is made and tested, I think it should be viewed with suspicion. 

Looking back at the past few months of commentaries:

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January 17, 2024

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The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq