Market Update: The Ten Year Wall of Worry.

I am always bemused by negative media headlines and over the past month these have been grabbed by both the 10 year anniversary of Lehman Brothers’ collapse (the fallout and chaos from the bank’s bankruptcy turned a credit crunch into a global financial crisis) and the length of the current equity bull market (as it has just become the longest ever at 9 and a half years), which has resulted in journalists predicting the next financial crisis and equity market crash.

While I will always remember the collapse of Lehman Brothers (the shock and sheer magnitude and scope of the crisis was frightening and made it feel like it was the end of the world), I learnt that governments and central bankers will do whatever it takes to save the financial system from collapse (which it undoubtedly would have done without their intervention).

However, I believe that one of the main after effects of the global financial crisis a decade ago is that equity markets now have a tendency to react disproportionately to any uncertainty or disappointment. Recent examples include the initial reaction to the Brexit vote in June 2016; the election of Donald Trump in November 2016; the unsuccessful Italian constitutional referendum in December 2016; and North Korea’s missile tests over Japan in August 2017. However, all these uncertainties turned out to matter very little and equity markets quickly recovered.

This has taught me not to panic no matter how bad things initially look, especially as diversification and risk management form the cornerstone of my investment philosophy and portfolio strategy.

Furthermore, while this may be the equity market’s longest ever rally without a fall of more than 20%, I believe that it has also been the most hated equity bull market ever. As for the doom-mongers, just because this is the longest ever bull market, doesn’t mean that it isn’t sustainable. I don’t currently see any equity market bubbles – in fact there is very little euphoria in the market, period. Consequently, there is nothing to suggest to me that it will end any time soon and as such I see no reason why equity markets can’t continue to climb.

Ian Copelin, Investment Management Expert*
*Ian Copelin is an Investment Director at Wealth at Work Limited which is a member of the Wealth at Work group of companies

The latest market updates are brought to you by Investment Managers & Analysts at Wealth at Work Limited which is a member of the Wealth at Work group of companies.

Links to websites external to those of Wealth at Work Limited (also referred to here as 'we', 'us', 'our' 'ours') will usually contain some content that is not written by us and over which we have no authority and which we do not endorse. Any hyperlinks or references to third party websites are provided for your convenience only. Therefore please be aware that we do not accept responsibility for the content of any third party site(s) except content that is specifically attributed to us or our employees and where we are the authors of such content. Further, we accept no responsibility for any malicious codes (or their consequences) of external sites. Nor do we endorse any organisation or publication to which we link and make no representations about them.