“‘Never’ is a long time, Marian.”
– Shane, in the movie of the same name, 1953
November is in the rearview mirror. With 11 months down and one to go, 2022 so far has been an unusual year, to put it mildly. First and foremost, the prices of both stocks and bonds have moved together to the downside. Most investors never have experienced such a phenomenon and in fact have clung to the belief that such a phenomenon never could happen. Never is a long time, however. The historical data in the investment world can be overwhelming, and what the data say is that stock and bond prices can and do move to the downside together about 5% of the time. Two thousand twenty-two has been one of those 5% times. Two thousand twenty-three? At the macro level, we suspect that the more traditional relationship between the two markets will reemerge, and are encouraged by a number of factors. At the micro level, the Value style of investing has been the place to be this year by a wide margin, and we expect Value’s outperformance to continue for quite some time. Onward and upward.
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