We talk about Financial Freedom here on BiggerPockets all the time, and most members of this platform invest in BOTH real estate and stocks. I think that we haven't really spent enough time emphasizing just how bad this market is for stock and bond investors, and the incredible destruction of purchasing power that is going on right now for folks who invest in traditional (and some alternative) asset classes.

Let's talk about the stock and bond markets:

1) The NASDAQ is down 31.7% as of the time of this post, year to date.

2) The Vanguard Total Market Bond Index Fund is down 10.9%.

That means that if you have a 60/40 stocks/bonds portfolio, you are down 23.8% YTD.

3) On top of that, inflation is up 8.6% YoY through May. This means that what you DO have leftover purchases only 8.6% of what it did this time last year.

Add that up, and the purchasing power of a 60/40 stocks/bonds portfolio is down about 32%.

I cannot overstate how massive this is. This is a retiree's worst nightmare (early retiree OR someone retiring at age 65 or older). Effectively, a third of the net worth of the individual investing in stocks and bonds has been wiped out this past year.

On top of that, any cash that is held has lost 8.6% of it's purchasing power.

On top of that, any crypto has been hit even harder (and we are now seeing runs on crypto banks!) Bitcoin is down 52% and that's strong relative performance to other cryptocurrencies.

Real estate is the last asset class standing in terms of holding it's value relative to inflation, and I think that a lot of folks are rightfully worried and/or skeptical that prices will hold in the real estate market in coming months with further rate hikes from the Fed expected.

The only way that an investor could have "won" in this environment (other than real estate... so far) would have been to buy commodities and accurate predict the rise in prices for things like oil, raw materials, and food.

Even gold is flat relative to the dollar over the past year, meaning that it too lost about 10% of it's purchasing power if thought of as a store of value.

Frankly, I'm still noodling on this situation. I don't know what to make of all this. I continue to invest for the long-term in real estate, stocks, and businesses, with a healthy cash cushion. But, it's just interesting to see the value of essentially every asset imaginable, except commodities and raw materials, crash over the past year, with seemingly no safe haven. The guy who went to cash lost to inflation. The guy who was in stocks lost. The crypto bros got crushed. The "safety" of bonds is in doubt with rates rising.

What's an investor to do?

Scott Trench

Podcast Guest on Show #223