{"id":1205,"date":"2020-06-25T11:05:39","date_gmt":"2020-06-25T10:05:39","guid":{"rendered":"https:\/\/www.arkenstonewealth.co.uk\/blog\/?p=1205"},"modified":"2023-06-19T15:14:37","modified_gmt":"2023-06-19T14:14:37","slug":"economy-down-stock-market-up","status":"publish","type":"post","link":"https:\/\/www.arkenstonewealth.co.uk\/blog\/economy-down-stock-market-up\/","title":{"rendered":"Economy down, markets up?"},"content":{"rendered":"

Economy down, markets up?<\/strong><\/p>\n

A recurring conversation with clients and fund managers of late has been around the current relationship between the economy and the stock market.<\/p>\n

Some find it hard to fathom that stock markets can experience positive weeks in the face of so much concerning economic data, and that markets are being overly optimistic about the recovery.<\/p>\n

Others feel that the worst of it has already been priced into markets and that the economic recovery is already well under way. For example, 20m people lost their jobs in the US earlier this year but 2.5m people were newly employed only last month.<\/p>\n

Whatever your view, the dislocation between economic data and the stock market continues to raise eyebrows. This might feel very odd but it is in fact nothing new \u2013 it\u2019s always been this way.<\/p>\n

The list of economic, social and political events that have troubled the world in the last 20 years alone is long. Some events were very worrying at the time but it\u2019s amazing how easy it is to forget them.<\/p>\n

Looking at the list, \ud83d\udfe2\u00a0 indicates calendar years where global stock markets went up<\/strong> with \ud83d\udd34\u00a0 being those years where markets ended lower<\/strong> (as measured by the MSCI World Index):<\/p>\n

\ud83d\udd34 2000 <\/strong>\u2013 Tech stock bubble bursts<\/p>\n

\ud83d\udd34 2001<\/strong> \u2013 9\/11 terror attacks<\/p>\n

\ud83d\udd34 2002<\/strong> \u2013 9\/11 after effects \/ Euro becomes legal tender<\/p>\n

\ud83d\udfe2 2003<\/strong> \u2013 SARS<\/p>\n

\ud83d\udfe2 2004<\/strong> \u2013 Asian tsunami<\/p>\n

\ud83d\udfe2 2006<\/strong> \u2013 Bird flu<\/p>\n

\ud83d\udd34 2008<\/strong> \u2013 Global Financial Crisis<\/p>\n

\ud83d\udfe2 2009<\/strong> \u2013 Swine flu<\/p>\n

\ud83d\udfe2 2010<\/strong> \u2013 UK coalition government \/ Flash crash<\/p>\n

\ud83d\udd34 2011<\/strong> \u2013 Japan earthquake \/ Arab Spring<\/p>\n

\ud83d\udfe2 2012<\/strong> \u2013 European Debt Crisis \/ MERS<\/p>\n

\ud83d\udfe2 2013<\/strong> \u2013 Taper tantrum \/ Quantitative easing<\/p>\n

\ud83d\udfe2 2014<\/strong> \u2013 Oil price collapse \/ Ebola<\/p>\n

\ud83d\udfe2 2015<\/strong> \u2013 China currency devaluation<\/p>\n

\ud83d\udfe2 2016<\/strong> \u2013 Brexit referendum result \/ Trump elected<\/p>\n

\ud83d\udfe2 2017 <\/strong>\u2013 Zika virus<\/p>\n

\ud83d\udd34 2018<\/strong> \u2013 US \/ China Trade war<\/p>\n

\ud83d\udfe2 2019<\/strong> \u2013 May resigns-Johnson elected \/ Trump impeached<\/p>\n

\u26ab\ufe0f 2020?<\/strong><\/p>\n

That\u2019s a lot to worry in anyone\u2019s book. But interestingly, had you invested in markets on 1st<\/sup> January 2000 and simply stared out of the window for 20 years, you\u2019d have seen your money rise by around 197%<\/strong> (source: FE Analytics, income reinvested). And depending on the exact point you entered the market in the last 20 years, your return might well have been even higher.<\/p>\n

There\u2019s no obvious pattern to be found in this simplistic data, but if this look back in time tells us anything, it\u2019s that:<\/p>\n

    \n
  1. We can\u2019t reliably predict or assume how markets and economies will move.<\/strong><\/li>\n
  2. Economic concerns don\u2019t automatically result in prolonged stock market falls.<\/strong><\/li>\n
  3. Markets tend to move on from shocks much faster than we might expect.<\/strong><\/li>\n<\/ol>\n

    We don\u2019t know where we are in the recovery at this moment, so for those of you already invested in markets, the message remains the same \u2013 hang tight, things will continue to improve over time.<\/p>\n

    For those still sat on the sidelines waiting for a market recovery (also known as higher prices<\/em>!), if now isn\u2019t a reasonable time to get your financial plan going, when is?<\/p>\n

    As ever, if you need help and advice or you have questions about what all of this means for your financial plan, please do get in touch.<\/p>\n

    Simon Ben-Nathan<\/strong><\/p>\n

    Investments carry risk.\u00a0The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    Economy down, markets up? A recurring conversation with clients and fund managers of late has been around the current relationship between the economy and the stock market. Some find it hard to fathom that stock markets can experience positive weeks in the face of so much concerning economic data, and that markets are being overly … Continue reading “Economy down, markets up?”<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/posts\/1205"}],"collection":[{"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=1205"}],"version-history":[{"count":12,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/posts\/1205\/revisions"}],"predecessor-version":[{"id":1596,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/posts\/1205\/revisions\/1596"}],"wp:attachment":[{"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=1205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=1205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=1205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}