Thinkpiece

01 Jun Thinkpiece

In this update: 

• Navigating the Unknown: Why Market Uncertainty is perfectly normal

If you have followed these posts for a while, you’ll have noted I have addressed the fundamental reality that all investors must eventually embrace – that is that uncertainty is not just a temporary market condition—it’s the permanent state of financial markets.

The Constant of Uncertainty

There have been a number of previous periods of extreme market unpredictability—specifically the 2008 Global Financial Crisis and the COVID-19 pandemic in 2020. These highlight one thing to me – our fundamental inability to predict market outcomes.

Where I mention (stock) market outcomes, I am referring to the short-term judgement about what will or will not happen. I am not talking here about the long-term market trajectory, which is to advance.

Any sensible investor will leave the day trading to the day traders. Investors in my mind have a long-term perspective and day trading couldn’t be further from that.

Whilst the recent external circumstances of market volatility have come in response to significant tariff increases implemented by the Trump administration, the internal response from the markets is the same as every other piece of news that causes a bump in the road.

The stock market is a story.

When the story changes, the price changes.

One thing that runs counter to many financial experts, is that genuine financial planners and advisers don’t set out to reach conclusions with confidence when it comes to market uncertainty. The only certain thing when investing, is uncertainty! There are no market experts that can accurately predict unprecedented market events like those we have witnessed recently.

All the theories, tools, calculations and forecasts won’t help you or anyone.

So, should we all run for the hills? Of course not. Bear with me.

If you follow time honoured principles, you don’t need specialist knowledge. However, our emotions often stop us from sticking to these principles. We convince ourselves that ‘this time it’s different’ and make a knee-jerk reaction, instead of sticking to the script.

The media, ‘investors’, businesspeople, academics, economists, government leaders and all manner of ‘experts’ will all give their advice. The reality is that none of them is more likely to be right than the average intelligent observer.

The Plan

Working with us, you can achieve a sensible, costed and long-term plan that may or may not use investments as part of that strategy. Investments are a tool to help you achieve your objectives. But they must be used appropriately and in a way that is commensurate with and compliments your wider plan and objectives.

If one is going to invest, the structure and finances around those investments need to support that investment strategy.

If one is dipping into one’s investments for this and that, and these expenditures are not part of a cohesive plan, that approach is unlikely to be sensitive to those investments and get the best from them.

In this way, everyone’s financial plan in very personal only to them and it will not apply to anyone else.

The Opportunity in Crisis

Despite the market uncertainty, opportunities increase for fund managers and investors. Bargains present themselves, but like the sales, they won’t stay around forever.

The greatest buying opportunities often coincide with the moments of greatest fear and uncertainty — which is a time when the unseasoned investor is often paralysed by concerns. This is letting one’s emotions run the show and it is an investor’s mistake – Overemphasis on short-term thinking in the context of long-term assets.

In investing, what is comfortable is rarely profitable.

Robert Arnott

Successful investing and a robust financial plan have nothing to do with achieving certainty. It’s about having a sensible and costed plan and sticking to it!

Your opportunity

If you’ve not yet put in place a sound financial plan and you’d like to know more, please feel free to contact us on 01626 305318 or via email here.

The value of investments can go down as well as up. You may end up with less back than you have paid in. Past performance is no guarantee of future returns.

The views expressed are not to be taken as financial advice. Professional advice should be sought before proceeding.