Markets move. This is the way.

Markets move. This is the way.

Financial media will often report on market volatility seen from day-to-day, week-to-week, and month-to-month. 

Last week, the FT reported on the “𝘸𝘰𝘳𝘴𝘵 𝘸𝘦𝘦𝘬 𝘪𝘯 18 𝘮𝘰𝘯𝘵𝘩𝘴 𝘢𝘴 𝘴𝘭𝘰𝘸𝘥𝘰𝘸𝘯 𝘧𝘦𝘢𝘳𝘴 𝘮𝘰𝘶𝘯𝘵”. Whilst this statement is true, without the context historical returns provide this headline might cause investors unnecessary discomfort.

This figure shows that volatility is indeed a feature of markets, rather than a bug, as the saying goes. Large weekly swings in value are commonplace. Bearing with this shorter term uncertainty is necessary for investors to reap the rewards that stock markets can deliver over the longer term.

Over the time period shown, 43% of weekly periods saw negative returns. Not far from a coin toss.

(Mr) J.P. Morgan once provided one of the great short term market forecasts: "It will fluctuate.” 

This is the way.