Year: 2022

In stark contrast to the preceding three years of above-average positive returns, 2022 was one of the worst years for both stock and bond nominal returns in the last century.

A Wall Street Journal editorial entitled “Schrödinger’s Recession” appropriately describes the financial landscape today. The article compares the state of the economy to a famous thought experiment published in 1935 by Nobel Prize-winning Austrian physicist Erwin Schrödinger.

Most drivers have likely experienced the strange, but all-too-common phenomenon of a “phantom traffic jam.”  After traveling down the road at a normal pace, suddenly traffic comes to a screeching halt without any apparent explanation (a wreck, a broken-down vehicle, etc.) for why the standstill occurred.  Phantom traffic jams are caused when a driver unexpectedly brakes during a time of high traffic density, bringing everyone behind to an abrupt stop. 

Exactly two years ago, the world declared war on an invisible enemy: COVID-19. Markets collapsed and the S&P 500 index delivered its second worst return to start a year since 1927. From the March 2020 low, the S&P 500 has rebounded nearly 100%, marking the best two-year price performance in over 75 years (CHART 1). But just as one war seemed to be ending, another one began in Eastern Europe.