It has been an uncompromising year for investments so far, by some measures one of the worse six months on record.
I read that 98% of the time returns are better than the year to date have been. Also, apparently, this is only fourth time in the past 100 years or so that equities and bonds have both fallen for two quarters in a row at the same time. This is quite a rare setback.
Setbacks are entirely to be expected; it is human nature for us to swing between being overly optimistic and pessimistic. Human nature is reflected in investment markets.
Both the upswings and downswings are temporary, what comes around, goes around now and forever.
There are several numbers on our side. For example, 75% of the time the value of company shares is increasing. And the very nature of a temporary setback means than expected future returns are now higher – that is how averages work.
Billionaire investor, Howard Marks, writes as well as anyone on investing. I have mentioned his “pendulum” before, THIS recent article revisits that theme.
We never know when setbacks will start or end and so cannot plan for them. What we can do is have a strategy in place to deal with them – and through our work together you do.
Things might appear to get worse before they get better. Inflation might take longer to tame, but do not forget a good antidote to higher prices is higher prices – the more things cost the less we will spend. Happily, stagflation is not here, and will not be without large and persistent unemployment. And then there is war, political uncertainty, the climate etc. The list of things to worry about never shortens, yet we progress nonetheless.
I am pleased to see that your financial plans and forecasts remain in good health and on track despite the temporary setback. Please sleep easy knowing that your financial futures are as secure as they ever have been.
That there has been no panic amongst our clients after one of the roughest six months on record, heartens me greatly. I believe it is testament to the effectiveness of our disciplined approach and wise investment counselling – and your unerring belief in what we do and why.
I am off for a few weeks of fun with children, dogs, camping, cricket and football. I hope you have some nice things planned too.
Have a terrific summer.