READ: Stocks on Track for Worst Start Since 1942
The first quarter was unusual in that both stocks and bonds were down. In fact, government bonds experienced their worst quarter in nearly forty years, so even the usual protection that bonds provide in turbulent times did not play out well this time around. Starting in November, the markets have experienced draconian internal sector and style rotations as, or more extreme than anything I have seen in my 25-year career. Some indices experienced one of their worst starts to a year since the Great Depression, after already experiencing significant drawdowns in the months prior. Long-duration stocks, which are those where expected earnings and dividends are further in the future – this includes forward looking growth and disruptive innovation stocks – have been strongly sold off. As of this writing, the well-known ARK Innovation ETF, a proxy for the long-duration disruption innovation space, is down over 49% year-to-date after declining almost 25% in 2021.