Some disappointment of investors in stocks
2022.12.26 06:29
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Some disappointment of investors in stocks
Is it safe to say that you are having a melancholy outlook on your 2022 speculation returns? Yes, almost all investors in stocks and bonds have endured a challenging year. However, some people have been hit harder than others.
In the rebound from the coronavirus market crash in 2020, pockets of irrational exuberance emerged due to near-zero interest rates and cash-rich consumers. High-risk development stocks — like those claimed by Cathie Wood’s ARK Advancement ETF (image: ( The NYSE:))—enthralled Main Street and Wall Street alike.
From a pandemic low of $33 in February 2021, ARK Innovation rose to a peak of just shy of $160 in February 2021. However, fast forward to the present day, and the shares of the fund have reached their March 2020 bottom. This year alone, the fund has lost 67%, or 80%, of its all-time high. One fund has profited from ARK’s woes: The NASDAQ: AXS Short Innovation Daily ETF sells short all of ARK Innovation’s stocks in the hope that they will fall. In 2022, AXS is up almost 86%.
Yet, ARK Advancement is not really 2022’s just huge failure. Special purpose acquisition companies, or SPACs for short, were a popular way for private businesses to become publicly traded in 2021. The first half of 2022 saw a sharp decline in the total number of new SPACs issued, and this pattern is likely to continue throughout the remainder of the year. What about the results of businesses that went public through the SPAC process? According to Bloomberg, the median post-merger SPAC company’s debut this year has seen a stunning 70% decline.
Additionally, cryptocurrencies cannot be ignored. Stalwarts like and are down more than 60% in 2022, and smaller “altcoins” have even worse results. In the meantime, investors lost a lot of money on some stablecoins—tokens that are thought to be pegged one-to-one to the dollar—when some crypto lenders went bankrupt in recent months. From nearly $3 trillion in November 2021 to nearly $800 billion today, the total value of cryptocurrencies has decreased by approximately 65 percent year-to-date.
The bond and stock markets shouldn’t promise annual gains. Even though a drop of 15% to 20% is bad, it pales in comparison to the crashes we’ve seen with these other assets. In addition, while it is debatable whether investors in SPACs, cryptocurrency, and ARK Innovation will ever be able to recoup their losses, the pain that the mainstream stock and bond markets experienced in 2022 probably means that returns will be better in the years to come.
