2022 Performance | Half Time
Its half time in the 2022 season, and while its been a very disappointing 1st half, there actually are a few bright spots on the horizon.
We've now been gripped by a bear market since last November. Here's how IES, the indexes and the funds performed through the first six months of 2022.
IES Performance
For IES the first half of 2022 was a disaster. We suffered the worst performance in our brief 6.5 year history.
- Q1 loss: -0.4%
- Q2 loss: -5.3%
- Total loss: -5.7%
And as bad as those numbers look, to coin a famous golf commentator, they were actually "Better than most". As it turns out, we crushed the performance of the Indexes and virtually all of the Mutual Funds, all of whom posted some of the worst 1st half returns in 52 years!
Indexes
The S&P 500 had the worst half year since 1970!!!
Since January 3rd, the index is down 20% and now sits at levels originally scaled back in late 2020.
The Nasdaq actually faired worse, down 29% in the first six months.
Mutual Funds
With very few exceptions, fund performance has been terrible overall.
- The market rout has wiped out $3 Trillion in 401k and IRA retirement funds.
- Some benchmark returns from major fund groups illustrate how bad the funds have been hit (FYI - we are a Growth Stock investor for comparative purposes):
- Russell 1000 index: -20.94%
- Russell 2000 Growth Index: -29.45%
- S&P 500 Index: -19.96%
- S&P 500 Growth Index: -27.62%
- S&P 400 Midcap Growth Index: -24.93%
- In fact, only the Energy sector avoided the rout and only a handful of Energy categories managed marginally positive returns.
Crypto
Crypto currencies had been touted as a good hedge against inflation and a safe haven when the stock market slumps. It turned out to be neither in 2022.
- Bitcoin was nearly $69,000 last November and now sits below $20,000.
- The new Stablecoin collapsed costing investors around $40 Billion.
- A hedge fund dedicated to digital assets looks to be facing liquidation.
- Some near-bank companies which take cryptocurrencies as deposits and lend against them have suspended withdrawals.
In short, the Crypto markets are looking more like a boat anchor than the safe haven they were intended to be.
Some Good News
It is hard to believe, but through all of this there is actually some potential good news.
- Economists believe that inflation will ease in the 2nd half of the year. However, as a cautionary note, the Feds interest rate hikes could still push the economy into a recession.
- History shows that years that start off this poorly usually rebound. Markets down at least 15% at the midway point, rebound in the 2nd half with average returns of nearly 24%.
- Many believe that we are near or at the bottom of this bear market. Near term we will likely either rebound strongly or be forced into a recession by interest rates. Either is possible.
So what does IES do?
We will continue to invest in Green markets and exit Red ones. We will be more aggressive in exiting Yellow markets with early signs of slipping to Red.
We will prepare and hope for a big comeback and big returns in the 2nd half of 2022.
As always, please don't hesitate to contact me with any questions.
Duncan Campbell
