“Patience is waiting. Not passively waiting. That is laziness. But to keep going when the going is hard and slow – that is patience.” Leo Tolstoy

Guilty as charged. I’m not a very patient person. I don’t like queues. I really don’t enjoy practicing; I want to play guitar like John Mayer now – not in fifty years. I think you get the picture. However, one thing that helps me develop a little patience is seeing positive progress.

Right now, as investors, we may both feel unsettled, even disorientated as world markets wrestle with a broad range of challenges. We know from history there will be times like these. In terms of the UK market, 1973 and 1974 stand out in terms of market falls. This was the period of industrial unrest, national strike action, and political turmoil. Inflation was building, oil prices had tripled and there was tension in the Middle East. Sound familiar? In 1973 the UK All Share Actuaries Index fell 27%, followed by an even more painful 50.4% fall in 1974. Fixed income also fared very badly over this period, one of the rare times shares and fixed interest both suffered negative performance. However, investor patience and discipline was rewarded as in 1975 the UK market rose a remarkable 145.1%.

The US stock market, which by a significant margin is the world’s largest market for shares, has for almost a hundred years provided an average return of around 10% per annum. Markets rarely return exactly 10% in any one year, but over time, those who remained invested have been rewarded with that longer-term average return.

Patience Is A Virtue When Investing

So, what can we do to hold our nerve and maintain our poise? Firstly, we need to guard against making “heat of the moment” decisions. Almost inevitably they turn out to be damaging. We have to accept that these shocks will happen over time, so we prefer preparing for them rather than trying to predict them. We regularly have to remind ourselves of the benefits of a long-term perspective. Equally, we can’t simply ignore short periods of unsettled markets.

Our Investment Committee met in late June to discuss and answer some key questions such as:

  • Are client portfolio outcomes consistent with expectations?
  • Are our portfolios behaving in the way we present to our clients?
  • Are our portfolios delivering performance within our stated risk and return parameters?

After exploring the research, results and risk models we concluded that both our investment philosophy and implementation remain on course to deliver the long-term outcomes we expect.

We will have the opportunity to discuss this individually and in detail at your regular reviews, but if you have any pressing questions or concerns please let us know, we are always happy to talk.