I went back to analyze the development of my benchmark, "MSCI ACWI IMI Net Total Return in CHF” as calculated by MSCI, adjusted for CHF inflation as outlined here:
From now on, I will also comment on benchmark changes taking into account the change of purchasing power.
The inflation adjustment didn’t change much for Corona crash. It was fast and not accompanied by a surge of inflation.
The growth of the benchmark from the bottom of the Corona dip (23.03.2020) to the most recent all-times-high (16.11.2021) was 94.9% nominal CHF and 93.1% infl.adj. The inflation effect is bearable, I would say.
After that, it is very impressive to see how inflation changes the real return of the stocks market - always to the worse.
I previously defined a ‘Bear Market’ regime when the index drops more than 20% from the ATH.
In nominal terms, in 2022-2023, there was only one occasion when my benchmark went into this zone, with a minimum on 30.09.2022 (-21.9 % in nominal CHF). On inflation-adjusted basis, there were 6 occasion when the benchmark dived into a ‘Bear Market’ zone, with the following minima:
20.06.2022: -21.1%
30.09.2022: -24.2%
28.12.2022: -22.1%
13.03.2023: -22.3%
04.05.2023: -21.1%
26.10.2023: -21.5%
Spooky.
On a positive note, the rally that have started from the 26.10.2023 bottom had a consolidation phase from mid-December to mid-January. Now this rally have just finished its third month, and no correction are in sight (they are coming unexpected, anyway).
The latest maximum was on 25.01.2024, 1802.2 CHF nominal. This is a level not seen from May 2022.
On a nominal basis, it is -7.5% from ATH, +18.4% from the 30.09.2022 bottom, 3.7% YTD.
However on an inflation-adjusted basis, it is -11.5% from ATH, +16.9% from the 30.09.2022 bottom, 3.7% YTD.
Therefore, we have not gotten out of the correction regime.