Worst year since 2008

2022 was a year in which valuations corrected, and in some corners of the market collapsed entirely. Performance of most all major asset classes was firmly in negative territory, with assets in the more growth oriented, speculative, or profitless camps hit the hardest. Volatility surged, with 122 trading days posting at least a 1% move in the S&P 500, the third most in the past 70 years (only 2002 and 2008 had more). The benchmark S&P 500 Index lost -18.1% on the year, the worst showing since 2008 on the continued anxiety surrounding interest rates, inflation, and the overall direction of the US economy. Mid- and Small-Caps outperformed their Large-Cap peers by a healthy margin. Mid-Caps returned -13.1%, outperforming by more than +500bps, while Small-Caps returned -16.2%, outperforming by just under +200bps. The outperformance of Mid- and Small-Caps had much to do with their overall sector composition skewing more towards Value than Growth, and having lower starting valuations compared to many Mega-Cap (Growth) stocks. As a whole, Value (-5.3%) handily outpaced Growth (-29.4%) on the year. 9 of 11 sectors posted negative returns on the year led by Growth oriented sectors such as Communication Services (-39.9%), Consumer Discretionary (-37.0%), and Technology (-28.2%). Individual Mega-Cap Growth stocks lost significant value, including Apple (-26.4%), Microsoft (-28.0%), Alphabet (-38.7%), Amazon (-49.6%), Meta (-64.2%), and Tesla (-65.0%). Notable positive performing sectors included Value driven Utilities, which gained +1.6%, and Energy, which rose a staggering +65.7% on the year.

Graph on Credit and Equities returns

Bonds fared equally as poorly, with the Bloomberg Aggregate Bond Index losing -13.0%, its worst showing on record. Treasuries, investment grade and high yield corporate bonds, and fixed income securities of nearly all types lost value. Bonds offered little hedge value against stocks as interest rates rose. Bonds and Stocks both zigged, while few asset classes (i.e. Gold) zagged. Stocks and Bonds both lost value for only the 4th time since 1929, as shown by the nearby chart from Blackrock. The bedrock 60/40 portfolio comprised of the S&P 500 and Bloomberg Aggregate had its worst showing in nearly 50 years.

Matthew Krajna, CFA
Co-Chief Investment Officer

Matthew joined Nottingham in 2012 and is a member of the Investment Policy Committee. He brings over 13 years of investment experience to the team. Matthew is responsible for conducting investment research, due diligence, and contributing to Nottingham Advisors overall investment strategy. Additionally, He is responsible for establishing the firm’s strategic and tactical asset allocations. Matthew works with investment advisors and both individual clients & institutions to help build customized investment solutions to fit their needs.

Nottingham Advisors offers both institutional and individual clients experience, sophistication, and professionalism when helping them achieve their goals. With over 40 years of serving Western New York and clients in more than 30 states, Nottingham tailors each solution to fit the specific needs of each client.

For more information about Nottingham’s offerings, visit www.nottinghamadvisors.com or call 716-633-3800.

Nottingham Advisors, LLC (“Nottingham”) is an SEC registered investment adviser located in Amherst, New York.  Registration does not imply a certain level of skill or training.  Nottingham and its representatives are in compliance with the current registration and notice filing requirements imposed upon SEC registered investment advisers by those states in which Nottingham maintains clients. Nottingham may only transact business in those states in which it is registered, notice filed, or qualifies for an exemption or exclusion from registration or notice filing requirements. For information pertaining to the registration status of Nottingham, please contact Nottingham or refer to the Investment Advisor Public Disclosure Website (www.adviserinfo.sec.gov). Any subsequent, direct communication by Nottingham with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.

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