Billions Wiped Back onto Pensions

By | News & Views, Pensions | No Comments

This was not a news headline, nor will it be a headline we will ever see.

Yet this is exactly what happened on Tuesday this week.  The FTSE100 had its biggest rise ever, and the Dow Jones in the US went up by more than 11%, the biggest daily gain since 1933.

Our news doesn’t report this.  Good news doesn’t sell, sadly.  Sensationalist, bad news is what we hear when billions are wiped off the value of our pensions.  No big deal apparently when billions are added to our pensions.

Are we out of the woods?  We don’t know – it seems unlikely, as the economies of the western world have shut shop for three weeks, minimum.  We would be surprised if we don’t see further volatility in the days and weeks ahead, but who knows?

Tuesday’s rises demonstrate one thing very clearly, that is, when markets move, they often move very fast, and very unexpectedly.  Trying to time it is very difficult; we would say it is impossible, without a lot of luck.  It’s why we stress to all our clients that it’s time in the markets, not timing the markets that matters.

Many people have been asking, are markets at their lowest, have they bottomed out?  Who can say? The truth is, no one knows with 100% certainty.

What is absolutely certain is that shares in the great companies of the world are available for purchase at a significant discount from six weeks ago.  Also, it’s worth highlighting, with a high degree of confidence (although not certainty), that the price of shares in the great companies of the world will be higher in five years than they are now.  That’s all that matters; all else is noise and distraction.

One last point, knowing how the news reports on capital markets does make me wonder how good or bad things really are when it comes to other world events.  Perhaps, worthwhile, switching off the news!

As ever, please do get in contact if you need our help.  Our great team will do its best to help us all get through this together.

Please note that past performance is not a guide to the future, the value of an investment and the income from it could go down as well as up. You may not get back what you invest.


Today’s Market Falls in the Context of History

By | Investments, News & Views | No Comments

It’s been another tough week for capital markets however, context is an extremely important tool when it comes to investing.

All investors around the world will be feeling the emotional pressures of the recent rapid equity market falls, either because they can remember previous falls and times of uncertainty, such as the Global Financial Crisis (2007-2009), or as younger investors, they have not yet experienced material market falls.

We obviously cannot see into the future, however the global equity market falls we have seen since January, of under 20% or so at the time of writing, sit well within previous falls since 1970.

In terms of expected ranges of outcomes, we generally estimate that 95% of the time annual equity market returns should sit within an approximate range of + 45% to – 35% albeit outliers do exist beyond these limits.

The table below provides numbers around both the depth and recovery times for each of the five largest falls since 1970.

Peak date Decline Trough date Recovery date Decline


Recovery (months)
Sep-00 -49% Jan-03 Dec-10 29 95
Jan-73 -40% Sep-74 Jan-76 21 16
Jan-90 -35% Sep-90 Jan-93 9 28
Sep-87 -29% Nov-87 Mar-89 3 16
Jan-70 -19% Jun-70 Jan-71 6 7
Jan-20 -19%

How deep or long the current fall will be, no-one knows.

There will certainly be more rises and falls to come.  Yet we should take some comfort from the fact that things have been just as challenging at times in the past, albeit for very different reasons.  Recovery times sit well within the investment timeframes of most investors.  It is worth noting that an investor in global equites today has, in nominal terms, more money than they did at the end of April 2018, despite the market falls in late 2018 and those recently experienced.

These are tough times for all of us and for our Nation, but the words of wisdom that we always return to at these times are those of the legendary investor John Bogle, “This too will pass.”

This will pass and from an investment perspective, the key message is to be brave and disciplined as a fall only becomes a loss if we sell.

Remember, we are always available to take your call or answer your emails.  Please feel free to contact Wells Gibson, if you have any specific questions or simply if you would like some reassurance.

Photo by Jerry Zhang on Unsplash