Economic Outlook and Market Commentary
Perseverance is something that investors have needed in abundance, realistically since early 2020.
Investors have been under siege from headwind after headwind. First, the pandemic and national lockdowns saw the global economy grind to a halt, which unsurprisingly threw markets into their sharpest decline since the 1930s. When lockdowns ended and economies began to reopen, a quick return to normality was hampered by supply chain issues, which contributed to rising inflation. Finally, as 2022 began, Russia invaded Ukraine. Markets unsurprisingly dropped but soon bounced back. The subsequent response from the West has been more challenging for investors as sanctions, particularly on Russian energy products, contributed to levels of inflation across the globe not seen for decades.
It’s actually during periods such as these, that disciplined investors are rewarded over the long term for persevering during the short-term. Undisciplined investors will lose their nerve, sell out and hold cash until markets start to recover. This is quite possibly the worst course of action. Selling low and buying high is not a sound investment strategy and holding cash will only result in the investor’s real wealth being eroded by inflation.
