As you are probably aware, global stock markets are having one of their periodic sell-downs, which doesn’t make for comfortable reading sometimes when checking your portfolio.

So far from the highs, the tech-heavy Nasdaq is -16%, the S&P500 is -10% and the FTSE100 is slightly better at -5%. The falls are a lot worse in the high-growth names, which actually has been going on for longer and we have also seen Crypto selling off as well.

The quoted catalysts have been inflation and interest rates rising now, with potentially more coming as Central Banks try to tame inflation.

Yes, this all sounds scary, but please remember one thing.

This is normal.

Can I refer you to the chart supplied by JP Morgan Asset Management.

The grey bars show the annual returns for each year in US stock markets. The red dots, however, show the intra-year falls from peak-to-trough. The average intra-year fall is 14%. Note last year (2021) was an outlier with just a 5% fall – that was below normal as you can see.

We have talked previously about the ‘price’ we pay for growth and returns in investing. The ‘price’ is not necessarily in monetary terms, but more emotional. It’s the volatility, the uncertainty, even sometimes the fear.

This is the price we pay for achieving above-inflation returns. And we cannot escape it. It’s part of the system – always has been, always will be.

If you’re a client of mine, we have had these discussions before and we will continue to have them, as it is probably THE most important part of investing. Your plans have been designed in such a way to expect these sell-downs; that is why we make sure you keep some cash on the side.

I know it’s uncomfortable, and it may yet go down more before it bounces, but please remember this is normal. I can’t tell you when it will end, just that it will end and markets will go back up.

If you would like a conversation, please feel free to reach out directly.

Adam.

Adam Walkom
Permanent Wealth Partners
Phone 020 3928 0950
Email adam@permanentwealth.co.uk
LinkedIn www.linkedin.com/in/adamgwalkom