2022 was rather modest for many reasons and this is also reflected in the performance of the equity and bond markets. This is because 2022 was by far the worst year on the US bond market in over 150 years. And even for a mixed US equity and bond portfolio, it was the second worst year since 1871 for investors who had put their money into US securities. But things didn't look much better in Germany either. Government bonds plummeted by 21%, spoiling the performance of mixed securities assets.

For investors, the past year was mostly a flop due to the enormous rise in interest rates, leading many to ask the question: Can't we sit back now that the capital market has finally come to terms with the rise in interest rates? However, the answer is likely to leave many investors unsatisfied. Only if the economic outlook for the coming years were good could the question be answered in the affirmative - and this is not the case at all. In the USA, 66% of investors are threatened by a recession in 2024 and there are similar signs in Europe, as various indicators show. The central banks in the USA and Europe seem to be accepting this.

The question now is: which markets could absorb a recession particularly well - and where can we expect lower returns? To answer this question, investors should take a look at Europe. There, we currently expect equities to outperform bonds by six percent per year until 2033. The British and German equity markets are particularly interesting, as they are currently expected to outperform bonds by nine and eleven percent per year respectively. Government bonds are also very attractively priced in Europe, as they currently have a comparatively low interest rate of 3.6 percent per year. An impending recession could make them even more attractive due to falling share prices.

The outlook is worse for the USA, where we expect growth of just one percent per year over the next ten years. The reason for this is the overvaluation of equities, which we last saw to this extent during the dotcom bubble. They also have a poor risk/reward ratio compared to government bonds.

In summary, we can state that most equity markets are fairly or even favorably valued in relation to the rise in interest rates and can expect significantly higher returns than government bonds in the coming years. In the event of a possible recession in Europe and especially in Germany, a fall in interest rates is to be expected, which would quickly counteract any significant fall in share prices. In the USA, however, government bonds are much more attractive than the highly valued equities, which have so far ignored the rise in interest rates.