While most of the financial press focus on the impact of inflation on the cost of living, or falling asset prices, particularly residential property, due to the increase in interest rates used to combat this, the headlines are missing the biggest message of all.

Where did it all go wrong?

Having experienced one of the more chaotic periods for financial market in at least decade, investors could have been forgiven for thinking 2022 would be a little less eventful than years past.

The one sector that had protected returns from global equity markets in an eventful 2022 was technology, with the likes of Facebook, Microsoft, Amazon and Apple, continuing to power ahead, or at least hold their ground in the face of significant risk…

Global sharemarkets looked to have bottomed in June as markets began to digest the implications of the Federal Reserve’s aggressive monetary policy action. Comments from Governor Jerome Powell during the annual Jackson Hole Summit reversed the recent positive trend as he all but denied growing expectations that the central bank would be forced to cut rates in 2023 or 2024 if the economy slows as expected.

The value of advice is one of the hottest topics in finance right now. Successive governments have effectively strangled the demand side of the financial advice market, through layers of red tape and compliance, to the point that financial advice is now borderline unaffordable for many.

The RBA has continued to deliver what the central bank itself said just 12 months ago would never happen, increasing interest rates by 50 basis points in July and August. Despite Australia being among the most sensitive economies to movements in interest rates and bond yields, the cash rate has now moved to 1.85 per cent, seeing a near doubling in mortgage repayments for those who borrowed in 2020 and 2021.

The S&P/ASX 200 Index, often referred to as the ASX 200, is considered to be one of the benchmark Australian indexes. It forms the basis of the fourth and fifth most popular exchange-traded funds on the market and is commonly used by fund managers to measure their relative performance.

The latter half of 2021 and the majority of 2022 have been among the most challenging periods for investors in several decades. The traditional balanced portfolio, defined as one that holds 40 per cent of assets in government bonds and 60 per cent in indexed equities, is on track for the sixth-worst beginning to a year in the last century.

Just when it looked like the market selloff was complete and investors had fully ‘repriced’ businesses based on a significantly higher bond yield and cost of capital, volatility shifted into another gear in June. Even those sectors that had performed well thus far in 2022, being energy and materials reversed gains, the former only modestly, down 0.3 per cent, and the latter more than 12 per cent.

The latter half of 2021 and the majority of 2022 have been among the most challenging for investors in several decades. The traditional balanced portfolio, defined as one that holds 40 per cent of assets in government bonds and 60 per cent in indexed equities, is on track for one of the sixth-worst beginnings to a year in the last century.

At our core, almost every investor feels like a contrarian at some point in time. It is only natural to see value in something that has fallen significantly in a short period of time. And to be honest, I must have considered buying the leveraged Nasdaq ETF at least 10 times in the last few months as the tech sector fell into another bear market.

The internet and data age has led to a proliferation of information being available to every investor from the experienced to the firsttimer. This has seen a spike in finance and investment scams but also both high- and lowquality investment opportunities being made available directly to consumers, passing the due diligence risk to the buyer.

May was all about the Federal Election, as another three years expired, and Australian’s went to voting booths again. In the end, the betting odds and polls were extremely accurate, with the Australian Labour Party regaining Government for the first time in nine years.

Inflation, inflation, inflation (and interest rates). These were the only topics that mattered in April if you focused on the headlines. This despite extended lockdowns in China, war between Ukraine and Russia and an expanding energy crisis.

Whilst global sharemarkets have recovered much of the ground lost due to the Ukraine crisis, US Federal Reserve moves and surging energy costs, there is a general feeling that equities remain on the precipice of a bear market or extended correction.

Among the Federal Budget proposals that received the least fanfare was the extension of the ‘temporary’ relief on the minimum drawdowns for account-based pensions. Whilst the media attention on the legislative change immediately highlights the fact that it benefits the wealthy more than the rest, it affords an entire generation of Australians greater flexibility.

One of the more interesting and powerful implications of the pandemic, relating to investment markets at least, is the velocity at which every new piece of news or data is priced-into markets. We only need to look back at the events of March and April 2020 to be reminded that we experienced both the fastest fall and recovery in sharemarkets the space of just a few weeks.

Bond yields have become one of the biggest and most important talking points within investment markets in 2022. At their most simple, bonds and the interest or yields they offer, represents the so-called risk-free rate off which every other asset class in the world is priced.

Buybacks have been all the rage in last the few years. Triggered by the availability and low cost of capital, US-listed companies, in particular, have embraced the strategy with great gusto. The idea is quite simple; if you have excess cash in your company, why not buy back your own shares, in effect “investing in yourself?”