According to Pictet’s research, this had only happened two other times in history: first in 1931, at the depths of the Great Depression; and in 1969, at the start of the relatively mild recession that year and the next. Investors with the traditional balanced portfolio of 60% equities and 40% fixed income would have found little joy last year as both asset classes suffered.
Investment opportunities are returning this year as global markets bounce back from the paradigm shifts of 2022, says Pictet in its 2023 investment outlook.
Last year, the combination of unrelenting inflation, the delayed reaction of central banks — most notably the US Federal Reserve — and the war in Ukraine caused global markets much pain. The typically negative correlation between bonds and equities began to trend the other way, and 2022 created an historic moment as US government bonds and US equities both delivered negative performances.
