The most difficult part of long-term investing is holding your nerve when everything looks grim.
The difference in 2022 is that for the first time in a decade, markets have gone down and stayed down. The last 10 years have been ‘buy the dip’ because a quick bounce back was coming. Not this time.
The longer the markets stay down the greater the accruing discomfort for investors. The markets ebb and flow; always have, always will. They go up over time, always have.
Whilst timing markets is not possible, consistently there are times where sentiment is so poor that valuations are compelling. This, however, is only really clear after the event.
In some periods they scream higher and in others, they do nothing – but over time they have always risen.
Nobody in all history has ever been able to predict how markets will move. So, the only logical way to invest is for the long term because you know if you buy quality assets, they will appreciate in value. You can be pretty certain as to how much on average, but you can’t know how markets will move over short periods. Missing out on even a few of the best investing days over time, has a profound effect on returns.
2022 is the year the Pandemic effects hit economies. Lots of reasons but that is what has happened, exacerbated by Russia/Ukraine for Europe and added Brexit for the UK. These were shocks in 2022 but inflation should fall back dramatically in 2023.
All major markets have been hammered in 2022. There was nowhere to hide, but this also represents opportunities for investing when prices are down:
And finally…
Note: This is written in a personal capacity and reflects the view of the author. It does not necessarily reflect the view of LWM Consultants. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog, and the reader should accept that by its very nature many of the points are subjective and opinions of the author. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.