These are the ten worst years on record for a 60/40 portfolio. All data comes from academic sources, and use what would have been the aggregates for the larger stock market and the bond market. The data covers the years 1793-2021.
- 1931, -33.64%
- 1937, -23.93%
- 2008, -22.61%
- 1841, -18.77%
- 1907, -16.22%
- 1974, -14.23%
- 1839, -14.23%
- 1917, -14.22%
- 1930, -12.32%
- 1903, -9.98%
So far, the year to date return/loss is -14.40%, which puts 2022 as potentially one of the worst years ever. As one can see, double-digit losses over the 230 year period are rare, and only happen every 25 years.
What has made this year particularly insidious is that this year's bond market is shaping up to be the worst since 1796 when it lost -6.69%. This year, the composite bond market has lost -5.55%, which is also worst than 2009's loss of -5.16%.
References
Baltussen, G., Van Vliet, B. P., & Van Vliet, P. (2021, November 24). The Cross-Section of Stock Returns before 1926 (And Beyond). Retrieved from SSRN.
Calhoun, G. (2020, October 30). The Presidential Election Cycle and The Stock Market: A Classic Calendar Anomaly. Retrieved from Forbes: https://www.forbes.com/sites/georgecalhoun/2020/10/30/the-presidential-election-cycle-and-the-stock-market-a-classic-calendar-anomaly/?sh=7b520b1b4e77
Damodaran, A. (2022, January). Historical Returns on Stocks, Bonds and Bills: 1928-2021. Retrieved from NYS Stern School of Business: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
Goetzmann, W. N., Ibbotson, R. G., & Peng, L. (2001). A new historical database for the NYSE 1825 to 1925: Performance and predictability. Journal of Financial Markets, 1-32.
International Fellowship of Christians and Jews. (2021). What Is Shmita: The Sabbatical Year? Retrieved January 27, 2022, from https://www.ifcj.org/learn/resource-library/what-is-shmita-the-sabbatical-year
Korotayev, A. V., & Tsirel, S. V. (2010). A Spectral Analysis of World GDP Dynamics: Kondratieff Waves, Kuznets Swings, Juglar and Kitchin Cycles in Global Economic Development, and the 2008–2009 Economic Crisis. Structure and Dynamics.
McQuarrie, E. F. (2020, May 19). Returns on stocks and bonds 1793 to 2019 version 2-0. Santa Clara, California, USA.
Shiller, R. J. (2022, January). U.S. Stock Markets 1871-Present and CAPE Ratio. Retrieved from Home Page of Robert J. Shiller: http://www.econ.yale.edu/~shiller/
Siegel, J. J. (1992). The Equity Premium: Stock and Bond Returns Since 1802. Financial Analysts Journal, 28-38.
Smith, E. L. (1939). Tides in the Affairs of Men. New York: Macmillan.
Taylor, B. (2019, October 21). The Stock Market and the Impeachment of Andrew Johnson. Retrieved from Global Financial Data: https://globalfinancialdata.com/the-stock-market-and-the-impeachment-of-andrew-johnson
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