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Reflecting on a Tough Year

Dec 15, 2022 | General, Market & The Economy | 0 comments

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Going back to November 2021 – just one year ago – the markets had given us some great returns. Being diversified would have seemed like an ineffective approach when growth assets were producing some impressive returns. But, it is amazing how quickly the tide can turn.

It seems like a distant memory, but thinking back, most asset classes produced double digit returns in the 2021 calendar year.

For offshore equities in particular, the end of 2021 marked three calendar years in a row, of returns in excess of 20% per annum. Growth stocks (tech in particular) were the main driver of these returns and the US tech stocks just continued marching upwards.

Young working adults questioned their parents about missing out on astounding crypto returns. Bitcoin, along with all the other crypto currencies, enjoyed a bumper 2021. To quote a World Economic Forum article published in January of this year: “While Bitcoin only managed to return 59.8% last year, the crypto sector’s total market cap grew by 187.5%, with many of the top coins offering four- and even five-digit percentages.”

Commodity prices, coming off a low base, had also flown up since 2020.

As last year drew to a close, we as financial planners, were concerned that asset prices were inflated and we needed to tread lightly, especially with growth stocks.

The sentiment at the time was that wisdom had been cast aside. But as Covid-19 has shown us, bull markets can go on for much longer than wisdom deems fit. One never knows when a correction will come, but what happened in 2022 was a series of events that set off a market correction.

Firstly, in December 2021, United States (US) inflation rose sharply along with the resultant interest rate hikes and for the first time in a while put the US consumer under pressure. The rest of the world was to follow.

Another issue that initially contributed to inflation were the global supply chain delays as a result of the pandemic. These delays have all been much longer than the market initially anticipated.

On 24 February 2022, Russia invaded Ukraine in a major escalation of the Russo-Ukrainian War, which had originally commenced in 2014. This had knock-on effects on global food supply and energy. And still the nuclear threat hovers over us all.

China’s Covid-19 policy, their hard lockdowns and concerns that their vaccines do not work, have caused question marks over China’s growth. Today, investors are worried about a recession. None of the experts have a sense of whether it will be a shallow or protracted one.

In 2021, a concentrated risk exposure focused on tech stocks or crypto would have paid off handsomely. This investment approach would have produced spectacular results, but it does not last forever. … and that is what happened this year – a sharp correction as is reflected in the table below.


 Nov 2021

Nov 2022


























The year 2022 has been somewhat of a reset and a move towards pre-Covid-19 normality. Wisdom has also prevailed. It has once again proven that diversification is the one tool in the investment toolbox that continues to deliver through the different cycles. If we look at equities alone – even simply buying the broad-based index would have offered some downside protection.


Nov 2021

Nov 2022


Nasdaq Index



S&P 500 Index






At Veritas we believe in remaining invested through the cycles, in well diversified portfolios. We appoint managers that have both the bravery and discipline that can deliver on the mandates we set.

Discipline to sell down in good times when everything just seems to be going up. And, when the bull market continues longer than expected, a good manager must have the discipline to sell down and take profits when the time is right.

On the other side of the coin, a manager must show bravery. Bravery to buy into the market when everything feels like it is going down. To have the conviction to buy when it would be much safer to sit on the fence and ‘wait and see’. Recoveries happen quickly and good investors need to be brave to be part of that recovery.

Through Veritas, you are invested with some of the best asset managers in the world to make these calls for you. Through all the ups and downs, it is ultimately the mandates we set for these managers that need to be achieved, in order for your financial plan to work.

We wish you all a wonderfully relaxing break over the festive season and look forward to seeing you in 2023.




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