{"id":6446,"date":"2019-02-04T18:34:19","date_gmt":"2019-02-04T18:34:19","guid":{"rendered":"https:\/\/www.boosst.financial\/insights\/?p=6446"},"modified":"2019-02-05T14:47:32","modified_gmt":"2019-02-05T14:47:32","slug":"markets-fell-in-2018-disappointing-but-not-a-surprise","status":"publish","type":"post","link":"https:\/\/www.boosst.financial\/insights\/markets-fell-in-2018-disappointing-but-not-a-surprise\/","title":{"rendered":"Markets fell in 2018 – disappointing but not a surprise"},"content":{"rendered":"

Markets fell in 2018 \u2013 but keep this in perspective<\/span><\/h2>\n

 <\/p>\n

2018 may have been a disappointing year for equities, but this shouldn\u2019t have been a surprise.<\/p>\n

December 2018 dished up a rather distasteful present for the holiday period.\u00a0Many lines were written in the broadsheets about the global equity market falls, but were they really anything out of the ordinary?<\/p>\n

\u00a0“Stock market slide in 2018 leaves investors bruised and wary”\u00a0The Financial Times (31st December 2018)<\/i><\/span><\/strong><\/p>\n

 <\/p>\n

Since 2009 (the bottom of the market during the Credit Crisis) global markets have delivered positive returns in eight out of the ten calendar years.\u00a0 The last negative year for equities was back in 2011, when the markets were down around 7%.\u00a0 Over the history we have available to us \u2013 on average \u2013 one in three years deliver negative returns.\u00a0 Investors have, of late, been extremely lucky.\u00a0<\/strong><\/span><\/p>\n

Since 2008, in every single year, investors have suffered a fall from a previous market high and many of these falls were larger than 10%. However, even investing at the start of 2008 and suffering the 35% peak-to-trough fall in 2008, an equity investor would have turned \u00a3100 into \u00a3230, i.e. 8% compounded over 11 years, if they had been disciplined and patient (two known areas of human weakness that we try to ensure our clients do not succumb to!).<\/p>\n

As humans, we tend to have a strange view of what invested wealth represents and how we feel about it at any point in time.\u00a0 We tend to be happy as wealth \u2013 at least on paper – goes up to some value at a specific point in time and unhappy when we reach that value again, if it is achieved after a market correction.<\/p>\n

Remember, the true meaning of wealth is having the appropriate level of assets that you require, when you require them, to meet your financial and lifestyle goals.\u00a0 In the interim, movements in value are noise, somewhat meaningless and part and parcel of investing.\u00a0 When you invest in equities, you should try to avoid mentally banking the money you (appear to) make on the undulating, and sometimes precipitous, road you are on.\u00a0 Remember too that the headline equity market numbers are unlikely to be your portfolio outcome, as most investors own some sort of a balance between bonds and equities.<\/p>\n

 <\/p>\n

Keeping things in perspective<\/span><\/h4>\n

Investing in equities is always going to be a game of two steps forward and one step back.\u00a0 What equities deliver from one year to another is of little consequence to the long-term investor, who does not need all of their money back today.<\/p>\n

It’s worth remembering that equities are only one component of a diversified portfolio and if you’re reading this article having invested using one of our less aggressive portfolios, your equity allocation will be reduced, in turn reducing the impact of the equity market falls described above.<\/p>\n

As far as 2019 is concerned, no one who is honest knows what will happen in the markets.\u00a0 The global economy is still set to grow by 3.5% above inflation this year, according to the IMF, which is not that bad.\u00a0 Todays’ market prices reflect the aggregate view of all investors based on the information to hand.\u00a0 If new information is released tomorrow, prices will adjust to reflect the impact this has on company valuations.\u00a0 As the release of new information is – by definition \u2013 random, so too must price movements be random, at least in the short-term.\u00a0 Over the longer-term they reflect the real growth in earnings that companies deliver through their hard work, executing the delivery of their business strategies.\u00a0 In the longer-term, investing in the stock market is a game worth playing, at least with part of your portfolio.<\/p>\n

 <\/p>\n

As Benjamin Graham \u2013 a legendary investor in the early 20th<\/sup>Century once said:<\/p>\n

“In the short run, the market is a voting machine but in the long run it is a weighing machine”<\/span><\/strong><\/p>\n

\u00a0We could not agree more.<\/p>\n

 <\/p>\n

\u00a0<\/em><\/strong><\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

Notes and Risk Warnings<\/strong><\/span><\/p>\n

Use of FE Analytics Data<\/p>\n

\u00a9 FE Analytics 2019. All rights reserved. The information contained herein is proprietary to FE Analytics and\/or its content providers.\u00a0 Past financial performance is no guarantee of future results.<\/p>\n

This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.\u00a0This article contains the opinions of the author but not necessarily the Firm.\u00a0Past performance is not indicative of future results and no representation is made that the stated results will be replicated.\u00a0Errors and omissions excepted.<\/p>\n","protected":false},"excerpt":{"rendered":"

Markets fell in 2018 \u2013 but keep this in perspective   2018 may have been a disappointing year for equities, but this shouldn\u2019t have been a surprise. December 2018 dished…<\/p>\n","protected":false},"author":2,"featured_media":6447,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34,32],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/posts\/6446"}],"collection":[{"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/comments?post=6446"}],"version-history":[{"count":8,"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/posts\/6446\/revisions"}],"predecessor-version":[{"id":6455,"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/posts\/6446\/revisions\/6455"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/media\/6447"}],"wp:attachment":[{"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/media?parent=6446"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/categories?post=6446"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.boosst.financial\/insights\/wp-json\/wp\/v2\/tags?post=6446"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}