Market Volatility

A lesson in the volatility of the Stock-market. Since November 2021, the market has "bobbed along", not doing much to be honest, either up or down. This creates neither euphoria nor panic.

I thought it would be a good time to give a refresher on how the market works.

In any given year, the difference between the high point and the low point is 14% on average. This is called the intra-year decline.

On average, once every 5 to 6 years, the market declines around 30%, this is known as a bear market. Technically a bear market is a decline of 20% or more from its previous peak.

Despite all of the above, around 75 of the last 100 years have produced positive returns.

Despite all of the above, the long-term annual return of global equities, net of fees, has been around 10% per annum.

So, short-term volatility is the price we pay for long-term gains.

This is why we invest in global equities.

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