It is funny how much our thoughts and judgements are influenced by recent events.
As we approach the second half of the year, we might readily conclude that 2018 will be looked back on as a turbulent year for equity and bond markets.
After hitting record highs in January, global equity markets slumped into correction territory in February and March. Investors rushed for the exits amid growing fears following a bond market rout.
This was triggered by early signs of rising inflation in the US on the back of accelerating economic growth and wages rising after years of stagnation.
Yields on US government bonds, which rise as prices fall, subsequently hit their highest level since January 2014, with the benchmark 10-year yield climbing above the symbolic psychological threshold of 3 per cent.
Investors were confused by the messages sent from financial markets. In the year to date, there have been seven days when global bond and equity markets, which traditionally move in opposite directions, fell simultaneously.
Investors could not rely on another key feature of markets in 2017 as evidence emerged of a rotation out of technology stocks towards banks and energy names.
But did this actually happen? Have we experienced a market rotation or have our perceptions been tainted by the sell-off earlier this year?
Let us start with the technology sector. Allocation to the so-called Faang (Facebook, Apple, Amazon, Netflix and Alphabet’s Google)stocks was a big driver of performance in 2017, in addition to Chinese names such as Tencent and Alibaba.
This group of big technology companies suffered their worst sell-off in February in response to fears over tighter regulation and other big setbacks for these companies that make use of so much of our personal data.
Facebook and other Faang shares faced pressure after reports that Cambridge Analytica, a data analysis company employed by President Donald Trump’s election campaign, mined the personal data of 50m Facebook users.
This triggered a repricing of their growth potential over the long term, with such scandals strengthening calls for regulators to diminish their dominance.
However, these fears were short-lived as those five stocks have all outperformed the S&P 500 index in the year to date (as of 8 June).
So far this year, Netflix is up 58 per cent and Amazon 29 per cent, while the US equity benchmark has returned only 1.58 per cent in US dollar terms.
Although investors might be more sceptical about their long-term growth potential, they took comfort from strong quarterly earnings statements. Several Wall Street analysts admitted they had made a bad call by predicting an iPhone slowdown.
Apple also pleased the market by launching a $100bn (£74bn) buyback program and lifting its dividend.