Up, down and turnarounds

Markets are meant to fall, says Dr Benjamin Holdsworth, but can you keep the falls in perspective?

Last year may have been a disappointing year for equities – but it shouldn’t have been a surprise. 

December 2018 dished up a rather distasteful present for the holiday period. Many lines were written in the broadsheets about the global equity market falls, but were they really anything out of the ordinary?   

‘Stock market slide in 2018 leaves investors bruised and wary’ read a headline in the Financial Times on 31 December 2018.

Since 2009, the bottom of the market during the credit crisis, global markets have delivered positive returns in eight out of the ten calendar years. 

The last negative year for equities was back in 2011, when the markets were down around 7%. Over the history we have available to us – on average – one in three years delivers a negative return. Investors have, of late, been extremely lucky.   

Since 2008, in every single year, investors have suffered a fall from a previous market high and many of these falls were larger than 10%.