What Putting $10,000 in These Assets Would Have Returned in 2018
For sheer breadth of poor performers, 2018 is shaping up to be a woeful year for investors.
(Bloomberg) -- In terms of losses, there have been worse years. But for sheer breadth of poor performers, 2018 is shaping up to be a woeful year for investors -- the worst ever by at least one measure.
Out of eight major asset classes tracked by Bloomberg, just two are on track to deliver positive total returns this year. Treasury bills top the list, which tells its own story, while emerging-market stocks fare worst.
“In 2018, the era of excess returns in bonds and equities ended,” Bank of America Merrill Lynch strategists led by Michael Hartnett wrote in a recent note. “The Wall Street news was bullish, but the price action was bearish.”
Trade tensions between the U.S. and China, the ongoing uncertainty over Brexit, Italy’s budget standoff and an inverting yield curve as the Federal Reserve hiked rates all damped sentiment. A fall in the once-mighty tech giants in the U.S. and China helped fuel wider stock losses, commodities slumped with oil, emerging markets struggled against a stronger dollar, and even the cryptocurrency bubble burst.
“You’ve got a lot of idiosyncratic events that happened this year,” said Thomas Taw, head of APAC ETF and Index Investments Strategy for BlackRock Inc. “Particularly around emerging markets, concerns around debt and trade tariff escalation.”
If it was tough for the professionals, it wasn’t any easier for mom-and-pop investors. Here’s a look at how a hypothetical retail investor would have fared, putting $10,000 to work at the start of the year in a selection of noteworthy assets:
Tech Check
The FAANG group of tech giants -- Facebook Inc., Apple Inc., Amazon.com Inc., Netflix Inc. and Alphabet Inc.’s Google -- were among the key drivers of the bull run in U.S. equities. They also led the charge on the way down after peaking in June as ahost of reasons, from slowing growth and the trade spat wreaking havoc with supply chains to regulatory concerns over the influence of social media in elections across the world, dented sentiment. Still, a $10,000 investment tracking the NYSE FANG+ Index would be up about $270 since the start of the year.
Less Than Shiny
It’s been a mixed bag for gold. A mid-year swoon as the Fed pursued a more hawkish stance turned around amid growing global growth concerns and speculation the central bank may moderate its tightening next year. Gold is vying with palladium for the crown of most expensive major precious metal in December, and while traders are now the most bullish on prospects in at least three years, a $10,000 investment remains underwater by about $450.
Burst Bubble
A screaming rally to close out 2017 that saw Bitcoin, the largest digital currency, almost eclipse $20,000, evaporated rapidly at the beginning of the year. A $500 million January hack at a cryptocurrency exchange proved to be the first in a string of bad news for the industry, which has now erased more than $700 billion in value as an expected rush of mainstream institutional investment failed to materialize. A $10,000 investment at the end of last year would have slumped to just over $2,500 as of mid-December.
Reefer Madness
Marijuana stocks went on a tear in the third quarter as California and Canada legalized sales for recreational use. But stocks exposed to the blooming industry were volatile: The ETFMG Alternative Harvest ETF surged as much as 32 percent only for the gain to go up in smoke in October as risk assets slumped. The fund is now down 21 percent for the year. An investor’s $10,000 would now be worth just under $8,000.
Outlier Market
Stock markets had a rough year just about everywhere, with one notable exception: the Jamaica Stock Exchange Market Index is the world’s second-best performer in U.S. dollar terms, posting a total return of about 28 percent for the year. The gauge, a mix of banks, insurers, broilers and stevedoring companies, has surged as the government cut borrowing and billions of dollars of Chinese investment pour in. Jamaican stocks have been on a hot streak in recent years, with the benchmark up a whopping 330 percent since the end of 2013. Our investor would have a bank balance of just under $13,000 from the $10,000 wager.
To contact the reporters on this story: Eric Lam in Hong Kong at elam87@bloomberg.net;Gregor Stuart Hunter in Hong Kong at ghunter21@bloomberg.net
To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Cormac Mullen, Ravil Shirodkar
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