Time After Time
Can you still remember your dictation and spelling tests in primary school? Those tests usually struck fear in all of us, even amongst the bravest in school.
The worst part was not getting the results back, but having to show the paper to our parents and get their signature. The intense fear that welled up within was then replaced with relief and euphoria after going through a chiding and a reprimand to do better the next time round.
In a similar way, sometimes that same intense fear comes up again when we see our investments fluctuating dramatically when markets are turbulent. However, just like the “mild scolding” we got when our results were less than stellar, the fear and problems that we think are there, usually seem larger than they actually are.
The table below shows rolling 5 year returns from global stocks tilted towards sources of higher expected return such as value, small and profitable companies (like many of the GYC portfolios).
When thinking about investments, the short term fear smooths out to relief when you take a long term view. Since 1975, there has only been one five-year investment period where annualised returns have been negative — proving that markets go up for a vast majority of the time and suffer downtrends only for short periods.
The table below shows that when zoomed out even further, looking at rolling 10-year periods, global stocks diversified and tilted appropriately, experienced positive returns in all 10 year periods since 1975.
This data provides all of us with proof that if you invested in a evidence based manner with a long term view, you are likely to experience a positive outcome.
So just like the spelling tests, 2022 is also a test — where short-term fear will eventually give way to relief and euphoria. Market downturns do not last very long and staying put or even allocating more free cash to your investments at this point in time will help to boost your long term returns.
These questions may be on your mind;
What if I invest at the wrong time?
Will I lose money on my investments?
How should I be investing in today’s climate?
Due to the unique market conditions that we are in, we have specially dedicated a team to address such concerns. Click here to schedule a 30-minute pre-discovery sessions where we can have a chat with you to better understand your concerns.