Market Volatility Update

29th September 2022

2022 continues to be a very eventful year and stock market volatility increased this week after the “Mini Budget” which forced a Bank of England intervention in gilt markets and a warning from the International Monetary Fund (IMF).
The outlook for interest rates is that they could reach heights not seen for over 20 years and inflation continues to push higher, driven in the main by higher energy and food prices.
With all this negativity, it is inevitable that stock markets will come under pressure and this in turn affects the value of your pension or investment.
As with the “Covid Crash”, our message remains the same: unless your circumstances have changed, sit tight.
There will always be periods when markets fall, that is “the nature of the beast”, but markets always recover, and to be part of the recovery, it is vital to remain invested and try to ignore valuations during times like this.
It can sometimes feel that periods like we are in now last forever, but the reality is very different. See below a guide to “Bull & Bear Markets” produced by Vanguard which shows 77 years of rising (bull) and falling (bear) markets.
 Vanguard Bull v Bear Chart


The key points to take from this are:

  • In the 77 years since 1945, 64 of them has seen the UK stock market rising
  • This period encompasses wars, recessions, high inflation, housing market crashes, high interest rates, a global financial crisis and a pandemic
  • Bear markets (falling prices) tend to last on average around 13 months
  • Bull markets (rising prices) tend to last on average for nearly 6 years
  • Bear market falls are smaller than the subsequent bull market returns

So whilst this is no guarantee of the future, it does highlight that history has shown that you are rewarded for sitting tight through tougher times.

Our view is that we may well see the

 volatility (both up and down) continue into the start of 2023, but for every month that passes, we are moving closer to the start of a new bull market.
If you have any questions, please do not hesitate to contact your adviser.

Yours sincerely

The Wealth Management Team