Markets Keep Climbing — Why Investors Should Stay Grounded
It's been a truly extraordinary run for global stock markets. After delivering returns of +24% in 2023 and +19% in 2024, the MSCI World Index is already up another +13% this year.
The sharp 17% pullback we saw earlier this year, in what many dubbed Donald Trump's "tariff tantrum," proved to be nothing more than a speed bump. Markets not only recovered but have since surged to fresh all-time highs.
During that brief wobble, the familiar playbook came out: “Don’t panic.” “Zoom out.” “It’s time in the market, not timing the market”. We were no exception — our own ‘emergency blog’ went out on 4th April, as it happens, a week before markets bottomed.
But now, with markets powering higher, it’s time to reach for the other side of that same playbook: let’s not get carried away.
When investing, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invested. Neither simulated nor actual past performance is a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
No Crystal Balls Here
To be clear, this isn’t a warning of impending doom.
The truth is, no one — not even the most confident voices in the financial media — knows with any certainty what markets will do next. We certainly don’t claim to.
But there are two things we do believe in:
Over the long run, we’re optimistic about stock markets. As long as people keep innovating, and companies keep aiming to make money, markets should continue to grow over time.
That growth won’t be smooth. Markets go through ups and downs. Strong runs are often followed by dips, and those dips can feel sharp when they come.
That’s not something to fear — it’s simply part of the journey, and should be baked into any robust financial plan.
The Flip Side of “Time in the Market”
It’s often said that “the longer you stay invested, the greater your chances of success”.
Again, we’re certainly not immune to this. I’m probably guilty of over-quoting Warren Buffett, and one of my favourites of this is: “The stock market is designed to transfer money from the impatient to the patient."
Such words are often paired with a chart showing your odds of making money in the stock market over different timeframes. In fact, ‘here’s one I made earlier’, based on the S&P 500 (the benchmark US stock market index):
Based on this data, if you invested for just one day, there’s a 53% chance you’d make money. Stretch that out to a year and your odds improve to 78%. Over five years, it jumps to 93%, and over a decade, 97%.
So yes - time is your friend when investing.
But the part of the investment story that often gets left out is that the longer you stay invested, the more likely you are to go through a significant downturn at some point — what we call a “bear market” (a fall of 20% or more in stock prices).
This next chart, from the Animal Spirits blog, shows just that — again based on the S&P 500:
It highlights that if you’d invested for any 15-year period since 1950 (note, most of our clients have timeframes well beyond that) you would have experienced at least one bear market along the way.
And some of those drops have been severe. Here’s a list of the biggest market declines over that same period:
On average, these bear markets saw share prices fall by around 43%, with recoveries typically taking about 13 months. Excluding the unusual cases like COVID and Black Monday, it’s closer to two years before markets returned to previous highs.
To reiterate, we’re not forecasting tough times ahead. But just as we encouraged calm during market turbulence earlier in the year, it’s sensible now to keep expectations grounded after such a strong rally. Markets never move in a straight line — there will be bumps along the way: sometimes just a few potholes, occasionally something that feels more like a sinkhole.
Conclusion
The honest truth is that no one can say with conviction whether now is the perfect time to invest. Nor can anyone reliably predict the “next big thing.”
What we can do is focus on the factors within our control — the things that have consistently worked over the long run.
Staying invested through both good times and bad, so you capture the long-term growth of global markets.
Diversifying properly — never having all your eggs in one basket.
Investing regularly where possible, to smooth out the ups and downs (pound-cost averaging).
Blocking out the noise — markets are full of hype and headlines, but reacting to them rarely helps your returns.
Keeping costs low so more of the growth stays in your pocket.
Utilising tax allowances smartly to reduce unnecessary drag on your investments.
None of these are flashy. They won’t grab headlines. But together, they’re what drive real, lasting investment success.
Happy Thursday!
Kind regards,
George
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Important Disclaimer
This blog is for general information only and is intended for retail clients. It does not constitute financial or tax advice, nor is it an offer to buy or sell any specific investment. Since I don’t know your personal financial situation, you should not rely on this content as tailored advice. While we aim to provide accurate and up-to-date information, we cannot guarantee that all details remain correct over time. We are not responsible for any losses resulting from actions taken based on this blog’s content.
