Financial Markets - where are we now?

In this article, I offer some jargon-free advice to investors concerned about the financial markets. Hold fast, and all will be well. But, we hear you.

The markets, like most human beings, can be somewhat volatile.

They respond to events, just as we do. Governed and affected by various psychological states, they move from denial, fear and a degree of panic, through to relief, optimism and then hopefully a bit more optimism.

I’ve put together this blog to express my understanding of any concerns you may have, to update you on what’s happening and if I can, to set your mind at rest.

Also, to assure you that, as far as possible, your investment strategy IS the right one. It has been chosen with your longer-term goals and objectives in mind, and without going into the technicalities, allows for fluctuations.

My Advice, Summarised

Should you sell your investments? In a word, I would say no.

Time, and patience are the key here – in my view, and in my experience they’re as vital as each other. And, to give you some encouragement, strong returns are often seen after a fall in the markets.

Importantly, to expand my above point about the nature of your investment portfolio strategy, everything should take the long view: five, 10, 15 or even 20 years. Therefore, without glossing over our current state of affairs, or diminishing it in any way, I’m going to ask you to take an extended view of the markets. A view from above, you could say.

In brief, market analysts expect the unexpected. Unpredictability is predictable. They remain calm amidst drastic gyrations and what is generally loud noise.

It is the very nature of capitalism.

Moreover, I’m going to suggest that now may (repeat may) be the time to consider extra or additional investments, of which more later on.

We can’t predict the future. Likewise, the financial markets. As an independent financial planner, part of my role is to focus on the risk in your portfolio, and to offer you advice so that it can deliver returns on your financial plan.

We Are Where We Are

Without a doubt, we’re in a time of market stress.

So much has happened and of course, the markets have responded.

The world has dealt with Brexit, Covid (we’re not quite yet out of the woods on that one), various ad hoc terrorist attacks and now, war in Europe – a word that I never thought I’d apply to anything so close to home in my lifetime.

Let’s Go Back

Two years ago seems like a blink of an eye, I know.

In March 2020 the markets, as they often do, responded to and were driven by fear due to the pandemic. The FTSE dropped by 35% in as little as a month, a staggering decrease in an equally staggeringly short amount of time.

But, by May/June they had started to recover, and by the end of Summer 2020 most investors had made back the majority of their money. It was a short bear market.

And here’s a fascinating fact about 2021:

Although there were some problems surrounding fixed interest rates, gilts and corporate bonds, primarily due to rising inflation, and the worldwide supply of goods, it wasn’t all bad news.

Actually, when the London stock market closed for the final time in 2021 (on December 31st, of course) the FTSE 100 stock index had risen 14.3% for the year. This was the third-best year of the last decade (and its best since 2016), following its dramatic Covid-related crash the previous year.

But Then Again – It’s Been A Series of Events

The markets have been dropping since the New Year, and have been poised for a rather bumpy year. In the face of soaring inflation, rising interest rates and ongoing disruption to international supply chains, predictions were about sluggishness.

Although the UK’s trade links with Russia are few, its invasion of Ukraine has led to a spill-over effect on our economy. The threat of sharp rises in costs is never good news for the financial markets. The volatility in commodities that has arisen from energy price rises – not least given our region’s geographical proximity to the conflict - have all contributed to a downturn.

And now, sanctions, a run on the Russian banks, America’s embargo on Russian oil and gas.

Precarious situations cause instability, it almost goes without saying.

Emails for Clarity – and The Bigger Picture

May I offer you some advice?

If you’re a client of Delaunay Wealth management, you may be familiar with a 10% Loss Notification email, which as the name suggests advises you that your portfolio has decreased by 10% within a specific reporting period. In this case, January through to March.

Be aware that this forms part of our transparent approach, and of course this meets the obligations set down by regulators.

A steadfast, steady view is, in my opinion, what’s needed here. Your portfolio has a less than .1% exposure in Russia, and Delaunay keeps open the lines of communication with your investment managers. Further, whilst the markets may currently be slower and lower, upwards and downwards patterns are a normal part of the market cycle.

Remember your investments are long-term and will fluctuate during their lifetime.

A thought

I’d like to suggest that now could be the time to consider investing.

I would re-iterate could, as the markets may descend further before rallying. Or go in any direction. There are no guarantees. There are only known unknowns!

However, your investment portfolio aims to be farsighted. To help you meet your financial goals and objectives. I can help you take a view, and plan. Do feel free to get in touch on 0345 505 3500.