Long-Term Perspective on Short-Term Volatility

World Market Performance

Every now and then, unexpected events can take people by surprise. That happened recently with the UK’s EU referendum, and it caused a flurry of activity across world markets. Short-term volatility can make investing in shares uncomfortable, but that discomfort comes with the territory and it’s important to keep it in perspective.

We manage your assets to an investment strategy that is designed to achieve your financial goals. Where those goals are longer term, we use stocks and bonds to provide the growth required to achieve a positive return, above inflation. The value of shares can rise and fall from day-to-day, month-to-month and even from year-to-year. But, over time, they have provided a higher return than many other comparable assets.

The image above illustrates the point. It shows the MSCI All Country World Index, a broad index of stocks from around the world across both developed and emerging equity markets, and, for historical context, a selection of news headlines. It is clear that recent volatility is not unprecedented and while uncertainty can make investing uncomfortable, world stock markets are still capable of delivering a positive return in the long term. Since 1988, when this index starts, £1 invested has grown to £10.84.

The message is: stick to the plan, even during times of uncertainty. It sounds simple, but requires self-discipline and a belief in the power of markets that we can help you achieve. And with that discipline comes the ability to take surprises in your stride.

Duncan R Glassey
Senior Partner – Wealthflow LLP

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.