It's time to change the playbook: Prepare for uncorrelated surprises
Investors came into 2022 feeling good, with a three-year average annual return for the S&P 500 of 24%. In March, things changed. The Federal Reserve raised interest rates, signaling it was time to switch to bonds. The playbook said bonds were the much safer play. Then Russia invaded Ukraine. Commodity prices, especially energy and food, spiked. Supply chains broke. The E.U. faced a winter without enough energy to heat homes or power businesses.