2018 Was A Terrible, Horrible, No Good, Very Bad Year For Investors

A Years Worth of Investment Pain in a Single Chart

Photo by Aditya Vyas on Unsplash
We all lost money in 2018

Last week, I wrote about how we might be in the first Bear market in 10 years. Within minutes of publishing that story, stock markets jumped over 3% on stronger than expected U.S employment numbers and a signal from the Federal Reserve that they will be cautious with future rate increases. My first taste of truly poor timing to publish a story.

These employment numbers are good news as it indicates that the U.S economy is continuing strong in the early days of 2019. This helped reduce some of the fears of a global economic slowdown, created just a few days prior, when Apple announced it’s iPhone sales have fallen off a cliff in China.

The signal from the Federal Reserve that they may not increase interest rates as fast as previously expected is good news for the stock market. As I’ve written here the stock market hates higher interest rates for two reasons.

  1. Higher interest rates make it more difficult for people to use leverage to invest in the stock market.
  2. Higher interest rates increase the carrying costs of corporate debt, leaving less money for companies to reinvest in R&D or engage in stock buybacks.

I have no idea how the stock market will perform in 2019. What I do know with 100% confidence is that 2018 was a nightmare for investors. Here is a great chart from Visual Capitalist on how stocks, bond, and real estate faired in 2018.

Source: Visual Capitalist

That is a whole lot of red!

Stocks took a beating

  • The S&P 500 was down 6.2%
  • Canadian stocks were down 12.2%
  • International (developed economies) were down 14.5%
  • Emerging markets were down 16.9%

Not only were stock prices down significantly across the globe, there seemed to be no safe place for any investor to park their money.

  • U.S real estate prices were down 8.3%
  • Gold was down 2.6%
  • Corporate bonds were down 1.5%

The only investment vehicle that was not in the red was government bonds, with a positive return of 0.2% which does not even come close to keeping up with inflation.

Oh and Bitcoin? It lost 71% of its value in 2018.

So yes, we all lost money in 2018. It truly was a terrible, horrible, no good, very bad year for investors. Here’s to hoping 2019 is a better year than 2018.

This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.