Like any area of life, in investment there are basically accepted rules or truths that have stood the test of time.
But the chaos of 2022 has some people rethinking whether those axioms should now be challenged.
One such expert is Fidelity International investment director Tom Stevenson.
"Expressions like 'time in the market not timing the market' become investment adages because their truth endures through the ups and downs of the cycle," he said in the UK's The Telegraph.
"But sometimes, as [former UK prime minister] Jim Callaghan noted about politics in the 1970s, there is a sea change about which we can do nothing, and which is only really clear in hindsight."
One such example is back in 1956, when decades-long wisdom was that bonds were a superior investment to stocks.
According to Stevenson, that year Imperial Tobacco pension fund manager George Ross Goobey dared to make the outrageous claim that shares made better inflation– and risk-adjusted returns than bonds.
"He was right and the rest is market history."
Stevenson is startled to find himself thinking 2022 could be another year in which conventional investment wisdom could be shattered.
"Looking for the equivalent sacred cows today, I was unsettled to discover just how many things I could list about investing that I used to believe unreservedly and about which I'm now not quite so sure."
Image source: Getty Images
In 2022, bonds have performed as poorly as shares
The first axiom in doubt is that dividing your investments between shares and bonds would minimise volatility, thus "helping you sleep better at night".
"This year has been a shocking reminder that in certain circumstances (think high inflation and central banks prepared to risk recession to get it under control), both bonds and shares can perform extremely badly at the same time."
According to Stevenson, all of 2022 has severely tested the previously "reassuring" notion that when one of the two assets falls, the other rises.
"Risk-averse investors who have sought the shelter of a traditional balanced fund are quite reasonably asking their advisers what has just hit them."
In 2022, gold prices have not risen
The second idea that could now be consigned to the trash can is gold is a hedge against inflation.
"This illusion gained traction in the 1970s when the precious metal performed well alongside sharply rising prices," said Stevenson.
"But there is more correlation than causality at work here."
The actual truth, according to Stevenson, is that gold outperforms when inflation is greater than interest rates and bond yields.
"Then, the metal is forgiven its most glaring disadvantage — the fact that it does not pay an income."
Negative inflation-adjusted returns from gold and cash are associated with times of rampant inflation — but not always.
"Today's rapid swing from negative to positive real yields and the associated underperformance of gold this year make the point."
In 2022, growth shares have lost the battle
For more than a dozen years, high growth — and especially technology — shares had zoomed upwards. Many investors and experts attributed this to a structural change in attitudes, priorities and valuation methodologies.
But the crash this year has quelled the revolution.
"Investors are once again looking for the bird in the hand that less exciting but steady cash generators and dividend payers can offer," said Stevenson.
"Twenty years ago, we were reminded by the dot-com crash that shares on low multiples of earnings or assets, or which paid a high and sustainable income, were worth more than the market often acknowledges. I suspect we are relearning that today."
In 2022, China showed it's not the US
For many decades, investors saw the liberalisation of the Chinese economy with great enthusiasm.
The prevailing wisdom was that China would emulate the US' rise to eventually become the world's largest economy.
But 2022 has cast much doubt on whether the journey will be so straightforward, according to Stevenson.
"Beijing's recent prioritisation of 'common prosperity' over economic growth confirms that China has long since given up slavishly following the western development model."
Only a decade ago, the unstoppable rise of the middle class in China and their insatiable appetite for household goods, recreational needs and financial services looked like "a one-way bet for investors".
"A property bubble, regulatory squeeze and zero-COVID policy later, things look harder to navigate."
