What happened to major asset prices before 2022 and what changed in 2022? This article covers six key themes:
- The backdrop of high asset valuations and low expected returns before 2022.
- Investor responses to low expected returns, notably the boom in flows to private assets.
- A revised picture after 2022: much higher expected returns at least for bonds (less for private assets so far) after the biggest inflation scare in a generation and central bankers’ attempt to contain it.
- Contrasting fortunes and prospects for long-only
assets and long–short strategies. - Understanding the rollercoaster ride of value-versus-
growth stock selection strategies. - The important role of risk-mitigating strategies, especially trend following, amid protracted bear markets and elevated macro volatility.