. . . Markets have always been a rollercoaster

The market has no memory! Dr Benjamin Holdsworth on last year’s lessons that you can apply to 2020.

Every year, the same thing happens – people look back at last year’s investment performance to draw conclusions they can use to predict what markets will do in the year ahead. 

Predictions are futile, but we can learn simple lessons from 2019 that apply to 2020.

This time last year, the headline running across financial news site CNBC’s home page was ‘US stocks post worst year in a decade as the S&P 500 falls more than 6 per cent in 2018.’

The Wall Street Journal summarised the state of market affairs with this headline: ‘US Indexes Close with Worst Yearly Losses Since 2008.’

The headlines were ominous and investors were anxious. Some decided to get out of the market and wait for prices to go down. They thought that, after 11 years, the bull market was finally on its way out. They decided to ‘time’ the market.

We know what happened. Global equity markets finished the year up more than 25% and fixed income gained more than 8%.