2018 has been a rough year. And late last week, Bloomberg put out a chart that will make you wish you had put all your money on T-bills in the last 11 months.
If you take out volatility, this year’s cross-asset performance is the worst in more than a century.
$3 trillion of U.S. stock value has been lost since the market peaked in September. And while tax cuts, record buybacks, strong corporate earnings, and above-trend growth were supposed to keep the bull market running, investors have been met with a punch to the gut as stocks have crashed, defying conventional logic and looking like a precursor of what’s to come.
“That’s the market making a pretty big call on what’s about to come — the cycle is winding itself down finally, after nine years of recovery,” Rich Weiss, chief investment officer and senior portfolio manager of multi-asset strategies at American Century Investments, said. “There is nowhere in the rest of the world that you can look to for help.”
One thing’s for sure, all asset are struggling together. But T-bills have lived up to their reputation: they are the safest, and most even-keeled of all assets. This year, U.S. Treasury bills have generated returns of nearly 20%, more than doubling the returns of the next closest asset—leveraged loans—making them the undisputed champion of 2018.
While T-bills have won this lackluster year, emerging market stocks, the Asia-Pacific region, and oil are the biggest disappointments of the year in absolute terms, according to Bloomberg. Their losses, however, which are in the neighborhood of 10%, appear to be in line with recent years.
According to GMO LLC, with $70 billion in assets under management, we’ll see negative returns across most asset classes adjusted for inflation for the next seven years. But emerging market assets and cash will be the only place for gains.