End-of-Year Musings About The Market

Only liars manage to always be out during bad times and in during good times.

Bernard Baruch


It is amazing how time flies. It’s hard to believe that we have experienced so much in such a short span of time. We were barely out of an unprecedented global pandemic when high inflation struck, we encountered logistics bottlenecks for all manner of goods and services, and Russia invaded Ukraine.

Then in this year, we watched the collapse of several banks (Credit Suisse amongst them!), saw the first US President to be charged with criminal activity, observed China’s hiccups in trying to restart their economy and are now sitting through another armed conflict in the Middle East. It is perfectly natural to feel uneasy as the road hasn’t been smooth at any point in time. Despite the continued uncertainty, we continue to feel optimistic about the future like always.

This optimism is not borne out of hope and luck, but based on science and data — from learning about markets, their history, and how returns are generated over the many decades that have passed. Over the past few years, our investment philosophy and beliefs have been tested time and again, and they have held up.

As we went through one of the worst bond markets in history and a corresponding equity bear market in 2022, we constantly reminded you — that this was going to be short-term pain. As investors, we cannot control what crises we end up going through but we can control how we react to such events.

A key lesson is that we really cannot predict what will happen in the future. At the beginning of 2023, many financial institutions and strategists were calling for a global recession and advocated a reduction in equities and an overweight to bonds. To date, the forecasted global recession still has not materialised, equity markets are recovering, and bond-heavy portfolios have suffered much more this year than expected. With stocks again approaching highs which were reached over two years ago, investors and clients who sat through these tough times and did not react in a negative way are seeing the recovery in their portfolios.

As stewards of your hard-earned money, it’s satisfying to see that the choices we make together with you, can lead to good outcomes.

Now we are approaching a new year and it is very likely that we will once again face new worries and problems. How we deal with uncertainty is what defines and differentiates us. We want to make the right choices, but we never have all the information to do so. It pays to have a philosophy and investment plan to guide our choices, in investing, and in life. This philosophy will not change unless new evidence, data and studies dictate that we do so.

As such, we will continue to advocate broad diversification as the simplest and easiest way to reduce risk. We will urge you not to try to buy low or sell high because it is a very difficult thing to get right. We will tell you not to jump around, looking for the highest returning investments or the theme of the month as sticking by the allocation we created for you in your investment plan was the most optimal path for you to achieve your goals. We will walk with you and guide you when times are tough and bring you back on the right path when you get distracted.

We start each day believing that markets will go up a little but are fully prepared for any drop — and if you are an investor, you should too. We know that investments will always go up and down, but will be positive in the long run, because that is what history has shown. So let’s start the year optimistic and approach uncertainty with the belief that our plans are robust, are able to overcome challenges ahead and will succeed.

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A Last Note About 2023

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Investors Should be Aware of this Risk in 2024