Markets do what markets do!
Released On 16th Feb 2022
The past decade has been a pretty good time to be an investor in global equity markets. Only one year in the past 10 years has seen a negative return (2018) and over tjis period £100 invested in global equities would have turned into £340[1]. Since 1999 we have seen two prolonged, material market falls being the Tech Wreck of 2000-2003 (-48%), when the dot.com stocks crashed, and the Global Financial Crisis in 2007-2009 (-34%). Yet, even from the tops of the market in 2000 and 2007, global markets have still turned £100 into £394 and £373 respectively. Taking a long-term view on equity investments makes good sense but can be hard to do in the noise of day-to-day market movements. As we write, for example, Facebook has fallen 20% overnight!
As an investor, your equity allocation is the long-term driver of portfolio returns and needs to be viewed with your true investment horizon in mind. Most of us should be planning to receive a card from the Queen at some point in the future! You do not need this capital now, so you should try to avoid being concerned with shorter-term market movements. You can make up all sorts of stories and 'what if' scenarios about where the market might be headed. You may be right, but you may be wrong. Generally, this is an unhelpful process and is best avoided. Remember that market prices reflect all investors views, many of which will be like your own. It is not nice when our portfolios fall in values - as they have done so far in 2022 - but it does not really matter, as our horizons are long (if they weren't you would not be in equities), and it is this very uncertainty of outcomes from investing in a very broad array of companies that delivers the higher returns that equities eventually bring.
