Take a Bow

Jonathan Clements

AS WE WATCH OUR portfolios get pummeled by 2022’s imploding financial markets, this might not seem like the time for self-congratulation. After all, Vanguard Total Stock Market Index ETF (symbol: VTI) is down 19% in 2022, while Vanguard Total Bond Market ETF (BND) has lost almost 11%.

But ponder this: If you’d been less sensible with your money, your results could have been far, far worse. In particular, take a bow if you:

  • Didn’t buy cryptocurrencies. Bitcoin has plummeted 53% this year—and that’s better than many other cryptocurrencies.
  • Didn’t invest in special purpose acquisition companies, otherwise known as SPACs. For instance, De-SPAC ETF (DSPC) has slumped 63% in 2022, Defiance Next Gen SPAC Derived ETF (SPAK) is off 36% and Morgan Creek Exos SPAC Originated ETF (SPXZ) is down 33%.
  • Didn’t purchase nonfungible tokens or the companies looking to make money from them. Defiance Digital Revolution ETF (NFTZ), which says it tracks an index “comprised of equity securities of global publicly listed companies with relevant thematic exposure to the NFT (non fungible tokens), blockchain and cryptocurrency ecosystems,” has nosedived 63% this year.
  • Didn’t buy Cathie Wood’s ARK Innovation ETF (ARKK), which became the talk of the financial world after it soared 153% in 2020, only to shed 23% last year and another 50% this year.
  • Didn’t give up on international diversification. No, internationals stocks haven’t been big winners this year. But they’ve held up slightly better than the broad U.S. stock market, as evidenced by Vanguard FTSE All-World ex-U.S. ETF (VEU), which is down 18%, its performance helped by emerging markets. Indeed, Vanguard FTSE Emerging Markets ETF (VWO) is off 15% this year, better than both the broad U.S. stock market and developed foreign markets.
  • Didn’t give up on value. Maybe your portfolio has a tilt toward value stocks, which have been one of this year’s most resilient stock market sectors, with Vanguard Value ETF (VTV) sliding just 8%. Maybe you simply stuck with your total market index fund, resisting the urge to load up on growth stocks. Yes, Vanguard Total Stock Market ETF (VTI) has lost 19% in 2022. But Vanguard Growth ETF (VUG) has tumbled 27%.
  • Didn’t reach for yield. Vanguard Long-Term Treasury ETF (VGLT) is down 22% this year, Vanguard Long-Term Corporate Bond ETF (VCLT) has also fallen 22% and Vanguard Emerging Markets Government Bond ETF (VWOB) has slid 20%.

Lost “just” 11% on your bonds and 19% on your stocks? Cheer up. This year, that gets you bragging rights at the neighborhood barbecue.

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