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Starstruck

Posted December 28, 2022 at 5:15 pm
Finimize

What’s going on?

Plenty of tried-and-tested investor favorites lost their shine this year, making room for one gold-star sector to steal the limelight.

What does this mean?

Let’s make a deal: we’ll rip the bad news Band-Aid off first, then finish on a high. Stocks, for starters, were sucked dry by recession fears, valuation-denting rate hikes, and disappointing earnings: in fact, the S&P 500 – the biggest US index – tumbled 20% this year. Government bonds didn’t fare much better: investors were quick to ditch them when higher inflation and rates chipped away at bonds’ fixed payments, and central banks sold theirs to tamper down inflation. But one investment really took off: commodities went from strength to strength this year, as war in Europe thrashed supplies of energy and raw materials globally. That meant het-up demand outstripped supply and then some, tipping key commodity indexes into the green for the year. See, told you it wasn’t all bad.

Why should I care?

For markets: It’s not you, it’s the global economy.

Lucrative investing opportunities were few and far between this year: out of the whole S&P 500, only the runaway energy sector pulled off decent growth. Even your classic defensive go-tos like consumer staples and utilities – which folk tend to use no matter what – left investors barely breaking even. And the curse struck a few investor favorites too: Big Tech darlings Meta and Amazon’s stocks slipped 65% and 51% respectively this year, while OG EV-maker Tesla is languishing at its lowest in two years. So yeah, it wasn’t you.

The bigger picture: Crypt-ho-ho-ho.

Let’s be real, you were unlikely to take any gambles this year when you could settle for guaranteed returns from your savings accounts. Investors made the most of higher rates and stuck their cash into savings, and were quick to throw out their riskier investments first. Crypto – bet you saw that coming – was dropped like a hot potato, sending bitcoin and ether down 65% and 68% this year.

Originally Posted December 28, 2022 – Starstruck

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Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Finimize and is being posted with its permission. The views expressed in this material are solely those of the author and/or Finimize and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Bitcoin Futures

TRADING IN BITCOIN FUTURES IS ESPECIALLY RISKY AND IS ONLY FOR CLIENTS WITH A HIGH RISK TOLERANCE AND THE FINANCIAL ABILITY TO SUSTAIN LOSSES. More information about the risk of trading Bitcoin products can be found on the IBKR website. If you're new to bitcoin, or futures in general, see Introduction to Bitcoin Futures.

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