Every December, InvestmentNews looks back at the most important developments of the previous 12 months. From ETFs to ESG to TINA, we’ve got all the acronyms covered — and a whole lot more.
Farewell, TINA! Don’t let the Federal Reserve hit you in the backside on your way out.
TINA, which translates into “There is no alternative” among Wall Street cognoscenti, was finally shown the door in 2022, offering retirement investors and financial advisers alike an alternative to growth stocks and Nasdaq dip-buying that they had been severely lacking for well over a decade. Serving to seal TINA’s fate was a series of record-setting rate hikes by unrepentant, inflation-fighting Fed Chairman Jerome Powell.
To put numbers to it, the yield on the benchmark 10-year Treasury note started the year at 1.5%. After piercing 4.2% in late October, it has since receded back below 3.8%. That’s still a serious move, and one that sent many fixed-income investors into a wild rage at their financial advisers, ticked off as to why the so-called “safe” part of their 60/40 stock/bond allocation was getting unduly smacked.
A proper education about the inverse relationship between bond yields and prices might have prevented a lot of those conversations. But one thing every investor, and especially retirees, could plainly see was the fact that they were making money for practically nothing each month or quarter for the first time in ages. Like a heart that stopped beating and was jolted back into rhythm, compound interest was once again compounding for born-again bond investors.
So, what did they do to celebrate? They gobbled up delicious risk-free Treasury bonds. They piled mouthwatering tax-free municipal bonds on their plates. They lined up for those wacky Series I bonds like Taylor Swift tickets. Annuities, yes annuities, flew off the shelves like toilet paper during the pandemic.
“Yield, glorious yield!” income-starved investors sang like Oliver Twist in front of a buffet table.
But not a Las Vegas buffet table, mind you. These were safe — and generally guaranteed — income streams. Back at the casino otherwise known as the stock market, all those megacap tech stocks retirement investors were forced to swallow for lack of another option saw the rugs pulled out from them. Or, as in some cases, the curtain pulled back to reveal the wizard at the controls was more of the Oz variety than Harry Potter.
Shares of Meta Platforms lost two-thirds of their value in 2022, securing Facebook founder Mark Zuckerberg’s complete loss of face. Tesla’s stock price was cut in half as Elon Musk’s magician act wore thin.
And those crypto connoisseurs who banked on bitcoin, down 65%, and (former?) billionaire Sam Bankman-Fried? Well, they got fried.
The tech-heavy Nasdaq started the year near 16,000 and was last seen just above 11,000. The S&P 500 began the year above the 4,800 mark and now hovers around 4,000. The 60/40 fell 15% and all those retirement investors with target-date funds are now being forced to choose new targets if they plan on retiring anytime soon.
Billions and billions of dollars had gone to money heaven (or in Bankman-Fried’s case, the Bahamas). And all because investors had no alternative but to load up on overpriced stocks and digital coins because bonds were too pricey.
Well, that period of financial history is over. Ta-ta, TINA! Whatever 2023 brings, we know for sure one thing it won’t be bringing back, and that’s you.
To read more articles in this series:
IRAs now hold nearly twice the assets of 401(k) plans — and most of that money didn't arrive through annual contributions.
A new survey finds that many women prioritize financial security but continue to leave savings in accounts that may not keep pace with inflation.
Roundhill, Bitwise and GraniteShares funds remain on hold while the agency weighs how novel ETFs should be regulated.
"Shares of alternative assets managers have lagged this year as investors grow wary of private-credit exposure."
The fintech platform is touting a new AI-free Planning Observations feature, which draws on IRS tax records to uncover opportunities for advisors.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
