Dear Readers,

One benefit of over forty years of experience in investment management is being able to differentiate between short-term events and long-term trends. We have experienced a number of short-term shocks to the markets this century, perhaps most notably the so-called 9/11 attacks in 2001. Russia’s invasion of Ukraine in February 2022 not only sent shock waves through the market, it pushed energy prices and indeed inflation higher. Both events had a limited impact, however, and markets recovered fully in a relatively short period of time.

Of a different order of magnitude was the impact on financial markets of global financial crisis of 2007-2008 and the Covid pandemic of 2020.

Nonetheless, not only did global and local markets recover relatively rapidly from the event driven crises of the 2000s, they also recovered and powered ahead after the two structural crisis of the twenty-first century.

So, where do we locate the current Middle East war on the spectrum?  Currently, the crisis is localised and the indications are that miliary action may be relatively short term. The critical issue for markets, of course, is the impact of the war on global oil and gas supplies, the surge in the prices of these commodities and the knock-on economic and inflationary effect.

It would be foolish to predict where the conflict leads, nor its wider economic impact, but we expect both the intensive miliary campaign and its wider economic impact will be relatively short-lived. Our conclusions are drawn from consulting with our group of local and international research partners among whom are some of the world’s leading analysts.

So, where does that leave investors? Well, the one enduring lesson learned about crisis, whether event driven or structural, is to remain invested.

Remaining invested during a crisis is widely considered essential because it prevents the "crystallisation" of temporary dips into permanent losses and ensures you are positioned for the eventual recovery.

The Critical Risk of "Market Timing"

Attempting to time the market - selling before a crash and buying before a rise - is notoriously difficult, even for professionals. 

Missing the "Best Days": History shows that the stock market's best-performing days often occur in clusters immediately following its worst days. Missing just a handful of these top days can drastically erode long-term returns.

According to JP Morgan research, missing the 10 best days over a 20-year period could reduce an investor's total return by more than half.

Missing the 30 best days over the same period could result in an overall negative return.

While the empirical evidence speaks for itself, if you have any doubts about your current investments, your dedicated Wealth Specialist is just a phone call, WhatsApp or email away.

I look forward to talking to you next month and reviewing the progress made.

Sincerely,