Perspective Review: Four Years Since COVID
If you had known that markets would go through two bear markets over the next four years, would you invest?
It is perfectly reasonable to have some reservations.
The year was 2019 and the month of December pushed global stocks up with a +3.52% gain before starting a rapid decline into the first three months of 2020. Markets did not return to that previous high for another six months.
2020 was only four years ago but the worries and fears of the pandemic already seem like a distant memory.
The first bear market happened swiftly from January 2020 to March 2020, declining -21.37% in a short span of three months.
The second bear market which lasted for the majority of 2022 caused global stocks to decline a total of -25.63% from January 2022 to September 2022.
Despite these challenging market conditions, the cumulative returns over the past four years is +44.22%, representing an annualised return of +9.19% which is also in line with the long-term average return of global stocks. The resilience of markets to absorb risks, recover, and make new highs is a tale as old as time.
Whilst most financial headlines focus on the dominance of U.S. markets, not much attention is paid to the international market outperformance during the 2022 bear market. Developed markets outside of the U.S. as represented by the MSCI EAFE Index declined -14.45% in 2022 whilst the U.S. market represented by MSCI USA Index declined -19.85%.
Focusing your investments in single countries (U.S.) or single regions (e.g. Asia), exposes you to unnecessary risks and causes you to miss out on return opportunities. After all on average, half of the 50 best performing stocks globally in every calendar period over the past two decades have came from international markets¹.
If you would like to know more, click here to schedule a chat with us.
Most of us would trust an accomplished physician to manage our health. After all, physicians have specialised training, real-world experience, and access to tools outside the reach of the general public. Most importantly, they took an oath to prioritise the patient’s health over their own interests.
In the same fashion, GYC espouses the same expertise in markets as good physicians do with health care. Additionally, we adapt insights from financial science to develop a financial plan that is built upon a rigorously tested investment philosophy.
Experience the difference today with an interest aligned wealth manager.