Markets Tumble on Recession Fears

Published / Last Updated on 12/05/2022

Stock markets have tumbled today on concern that inflation, interest rate increases, cost of living, Russian sanctions and even threats of a trade war between the UK and EU on the back of the UK wanting to change the Northern Ireland Protocol as it is clearly not working have sparked fears of a global recession.

Most stock markets, except for UK and Japan are on average around 15% below their year highs.

We have decided to release this video as many clients will be concerned and several clients have contacted us thinking about switching out of markets.

We make the following comments:

Learn from your experience.  We had even larger falls when Covid-19 lockdowns came into force globally.  We have even larger falls with the credit crunch crisis of 2008 with major banks collapsing or being bailed out by governments.  Those falls were followed by quick recovery within a few months and even hitting year and all-time highs afterwards.

Markets will recover.  On the balance of probability, markets will recover as they always have done.  Unless of course, it is World War 3 between Russia and the NATO alliance.  Then we are all doomed.

Buy the Dip.  Warren Buffet famously said, and I know we keep repeating it.  “Be fearful when others are greedy and be greedy when others are fearful”.  Buy low, sell high.  When stock markets have fallen, if you have spare or opportunity funds available, invest when markets are low.

Hold your nerve and in the words of the Cornish sea shanty “Keep Hauling”.  If you switch out of markets when they have fallen, then you create real losses.  If you hold firm, markets will likely recover, and you can then decide to de-risk when they have recovered.

We currently favour non-UK markets such as USA, Europe, Far East, Emerging Markets and Commodity rich countries in the medium term.  In the long term, we favour sustainable investment and green energy sectors.

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