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Our
Clients

Financial
Planning

Investment
Philosophy

About
WealthFlow

Latest
Comment

Contact

Our
Clients

Financial
Planning

Investment
Philosophy

About
WealthFlow

Latest
Comment

Contact

11th
Jul
2023

Fishing for investment returns with a bloody big net…

Despite the doom and gloom of rising interest rates, elevated inflation, the fear of a wide recession and the continued war in Ukraine, global equity markets (developed and emerging markets combined) have actually risen in 2023.
 
In GBP terms, they have delivered around 7.2% to the end of June, recovering most of 2022’s fall.
 
Markets are forward looking and pretty good at reflecting all information publicly available to investors in current stock prices.
 
Some speculate that this may be due to the market pricing in its view on the benefits of the AI revolution for these stocks.
 
In fact just nine companies accounted for three-quarters of the 7.2% rise in global markets this year to the end of June.  The remaining stocks in the global markets delivered just a quarter of the total 7.2% rise.
 
It is interesting to note that Apple Inc. now has a stock market valuation of over US$3 trillion, which is around two-thirds the size of the entire UK stock market.
 
The important thing to note is that no-one knew that the rapid rises in these companies’ stock prices were going to happen in advance.
 
Similarly, no-one knows where they go from here.
 
Prices move on the release of new information which is, by definition, random.  It may be good news for these companies, or it may not be.
 
Such concentrated price moves may make some investors wish that they had held more in these stocks, but that is to succumb to the power of perfect hindsight.  Others will feel a fear of missing out (FOMO) and dive in hoping that recent past gains continue, succumbing to recency bias.
 
Sensible, evidence-based investors will simply feel glad that they have captured the market returns using the wide net of a well-diversified index fund or similar systematic investment strategy.

Duncan Glassey
Founder & Director – WealthFlow
duncan.glassey@wealthflow.com

 

This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated. Errors and omissions excepted.

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© 2024 WealthFlow Group Limited
All Rights Reserved | Privacy | Cookies Policy

Head Office & Consulting Rooms: 10 Charlotte Square, Edinburgh EH2 4DR.

Mail correspondence to our Central Scotland Admin Hub: WealthFlow Group Limited, PO Box 14947, Grangemouth FK3 3AU.

WealthFlow Group Ltd is authorised and regulated by the Financial Conduct Authority.

The guidance/advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK.

For your protection, unresolved complaints can be referred to the Financial Ombudsman Service.

To contact the Financial Ombudsman Service, please visit www.financial-ombudsman.org.uk.

WealthFlow Group Ltd. Registered in Scotland No SC635011. Registered Office: 10 Charlotte Square, Edinburgh EH2 4DR.