Headline: Investment Markets Behave Normally!
15th October 2018
If, against my advice, you were watching and/or reading the financial news last week you would have seen a lot of words like CRASH, SLUMP, ROUT, SELL-OFF, PLUNGE and TURBULENCE. Understandably, if you have money invested this might have made you a little nervous.
All this language implies that something out of the ordinary is happening. The world is coming to an end! Don’t worry, this isn’t the case.
Ok, there have been more downs than ups over the recent months. Since March the FTSE All-Share has fallen by about 11% and a lot of this was during the last week. But, what the headlines don’t tell us is that this is perfectly normal.
As demonstrated by the chart below, the average intra-year FTSE All-Share decline over the last 32 years has been 15.3%. So, this latest reduction is not even averagely bad…let alone an end of the world type scenario.
It is also worth noting that despite this average decline every year of 15%, almost 3 out of 4 years sees a positive overall return.
So, the best thing to do is not to read/listen to the news but, if you can’t help yourself, make sure that you are able to put what you are seeing into context and realise that ups and downs are a function of investment markets…and it is all perfectly normal.
