Goldsborough News – April 2025: Should I be concerned?

From an investor’s point of view, 2025 has been one of those years where already there has been a long list of things to be concerned about:

• the US election (late in 2024),
• the Australian election (May 3 is the date!),
• ongoing inflation concerns,
• unemployment concerns,
• continuing conflicts in the Middle East and between Ukraine and Russia,
• as well as the global economy broadly.

It seems a sad fact of life that the media is more concerned about “negative” issues that are in our lives, something that we read in the newspaper or see on the news constantly. Most of these issues have resulted in a pronounced level of share market volatility, but nothing earthshattering like we experienced during the GFC or in early 2020 with Covid.

Here are some ways that I believe can help to manage the “noise” that we hear and reduce our worry:

1. Put the latest concern that you hear in context – remember that there has always been a constant stream of worries/concerns that have impacted on investment markets. Over the last four years issues such as the potential for the US government to shut down and its debt ceiling debacle, Greece, the potential for an Australian recession, and a manufacturing slump (but to name a few) have all had the potential to cause significant negativity on investment returns. Over the last 100+ years the global economy has had plenty of worries, and yet Australian shares (the All Ordinaries Accumulation Index) have returned approximately 11.6% per annum since 1900 and US shares (the S & P 500) approximately 9.8% per annum.
2. Recognise how markets work – a diverse portfolio of shares returns more than bonds and cash long-term because it can lose money short-term. Share markets can be highly volatile in the short term but generally show strong returns over a rolling 20-year period. Invariably, short-term volatility is driven by “loss averse” investors projecting recent events into the future. So, volatility driven by worries and bad news is normal! It’s a price investors pay for better long-term returns.
3. Find a way to filter news so that it doesn’t distort your investment decisions – many investors choose to manage their own portfolio. If you are in this situation, build a good investment process or choose two or three investment subscription services and rely on them. If you’re working on a long-term strategy with your financial planner, stick to it.
4. Make a conscious effort not to check your investments so often – most clients check their portfolios on an infrequent basis. I have, however, met with clients who check their portfolio daily (and in some instances, several times a day). Professional fund managers are continually researching and reviewing the investments that they hold on your behalf. Each day a unit price is struck based on the “value” of the portfolio, based on their research. Monitoring your portfolio on a daily basis is a bit like tracking the All Ordinaries. If you were to track the All Ordinaries daily, you would find that the number of positive days equates to the number of negative days (about 50/50). If you were to look at the same index on a monthly basis about 65% of the months offer positive returns, 35% negative. If you look at it on a calendar year basis about 80% of the years are up, 20% down. And if you stretch it out to once a decade, since 1900 positive returns have been seen 100% of the time for Australian shares! I’m not suggesting you review things once every 10 years, but if you’re in the habit of reviewing daily, maybe look at doing it on a quarterly basis for starters.
5. Look for opportunities that bad news and investor worries throw up – periods of share market turbulence after negative news often present opportunities for investors as shares can be pushed into “cheap” territory. Baron Rothschild, of the famous banking dynasty, said the best time to buy was “when there is blood in the streets”. In other words, buy when everyone is selling! This may not necessarily be possible for individual investors, but quality fund managers adopt this attitude.

In conclusion, while the recent market volatility and negative sentiment may cause concern, it is essential to maintain a long-term perspective and focus on a well-diversified portfolio. By putting worries in context, recognizing how markets work, filtering news, and looking for opportunities, investors can navigate these turbulent times and achieve better long-term returns.

Brenton Miegel CFP®

Authorised Representative (No 227297)