Last week I wrote out to you with a discussion around the possibility of rough seas on the horizon as a result of the changes in the current economic landscape. As the week played out, volatility within share markets around the world increased, some significantly more than others. The tech-stock sector is currently feeling a lot of the heat, however with some of the biggest companies in the world being in that sector (Amazon, Microsoft, Apple etc.), the sell-off in this sector is spilling over into some other indexes.

I guess the question you’re probably wondering is this – what does this mean for my investments?

While the answer to this may seem extremely complex with many moving parts, in reality, it is simple. Short term fluctuations in share values mean very little to us as long term investors.

Given we are long-term, goal-focused investors, the progression of our decision-making remains the same; set goals – create a plan – build a portfolio.

Your portfolio has been specifically built and structured around your long term financial goals. It is not built around the next hot stock or how to get rich tomorrow, but how to provide for your future and meet your goals in the long run.

While nearly every person I know feels uncomfortable with volatility, fortunately or not, it is a reality of life. Long term historic market returns tell us that market volatility is not rare. Going back as far as 1950, the S&P500 (the top 500 companies in the US) has experienced positive annual returns in 56 out of the 71 years. 79% of the time. Throughout this same period, the average intra-year drawdown is 13.6%.

Every time we are in the midst of one of those drawdowns, it feels like the world has stopped spinning. However, with time, each of these drawdowns has become a dip in a chart that we have since surpassed.

If we can learn anything from history, it’s not the smartest investors that win. It’s the most patient. It’s those of us that can remember why we are investing and trust the process – through the ups and downs. This is what saw us through the volatile times of 2018, 2020 and every correction before those, and this is what will see us through the volatile times of 2022.

This time is no different – this too shall pass.


Important Notice: The information provided in this post must only be considered general advice. It has been prepared without taking into account any persons individual objectives, financial situation or needs. Before acting on anything in the article, you should consider its appropriateness to you, having regard to your objectives, financial situation and overall needs.