The Revenge of Win By Not Losing

For many investors, last year proved to be one of the most challenging in decades. Stocks and bonds jointly fell further than we’ve seen in at least 45 years (see chart below[1]), as central banks around the world aggressively hiked interest rates to battle surging inflation.[2] The classic “60/40” stock and bond portfolio – 60% stocks and 40% bonds – was down 16% in 2022, marking its worst performance since a 21% loss in 2008 (due to much larger stock losses) and its second worst performance since 1976.[3]

We know from experience that capital markets are resilient. For example, returns were positive for the 60/40 portfolio in 1977 and 2009, the years following those mentioned above.[4] And while 2023 may remain a bumpy road for the markets and economy, with the risk of a recession still high, we think the worst of it may be behind us, particularly for bond markets.[5] Even if inflation remains relatively high throughout this year and there are no interest rate cuts by the Federal Reserve – despite predictions of cuts in the futures markets[6] – investors are now being paid attractive rates to hold onto their bonds. Rates are higher than we’ve seen in more than a decade.[7]

Times like these highlight why we employ a more conservative approach to portfolio construction at Sapient. They also highlight why we partner with investment managers who share our philosophy that risk management is job #1. The math of compounding reminds us that losses hurt more than gains help. For example, last year’s 16% loss for a classic 60/40 portfolio needs a 19% gain to get back to breakeven. So avoiding large losses is critical to long-term investing success, and if one accomplishes this compound growth becomes a powerful ally.

All of us at Sapient thank you for allowing us to serve you, and we continue to work tirelessly to warrant the trust you have placed in us.


1. Bloomberg, U.S. Global Investors, as cited in Seeking Alpha, January 11, 2023,

2. Fortune, December 31, 2022,

3. Barrons, January 10, 2023,

4. Investopedia, October 14, 2022,

5. Bloomberg, Jan 18, 2023,

6. Advisorpedia, Jan 11, 2023,

7. FRED Economic Data from St. Louis Fed, Citing Market Yield on 10yr Treasuries,

Although the statements of fact and data in this report have been obtained from, and are based upon, sources that the firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitutes the Firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results. Indexes, such as the S&P 500 Index, are not directly investable.

Sapient Private Wealth Management
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Eugene, OR 97401

(541) 762-0300