As we head into the last two weeks of the year, we are once again living in uncertain times and Covid is dominating the headlines once again.
We are seeing an increase in case numbers and a tightening of restrictions with more confusion around what we can and can’t do.
In addition to this, we are constantly being buffeted by negative news which is overloaded with doom and gloom. Sadly, this attracts the headlines, much of which is noise and scaremongering.
Although it is not always easy to do, it is best to cut out the noise that comes our way and focus on the things that we can control and care about. The landscape we live in will always be constantly changing. Life is full of uncertainties and it is easy to get blown off course. Making small course corrections on a regular basis helps to move the needle back towards the direction we want to head in.
On a similar theme, I have recently seen some media scaremongering coming from the financial press (does it ever stop!) around whether the stock market (in particular the US market which has recently hit an all time high) is going to “fall off a cliff!”
Many investors appear to think a market high is a signal that risk assets (equities) are overvalued or have reached a ceiling. However, it is worth noting that average returns of the Standard & Poor 500 index (this is one of the most followed indices which tracks 500 large companies in the US) over 1, 3 and 5 years after a new market high, are similar to the average returns over any 1, 3 and 5 year period.
As I have written before, I’m no investment guru and I haven’t a clue what the markets are going to do but reaching a new high doesn’t necessarily mean that the market will retreat. Equities are priced to deliver a positive expected return over time so reaching record highs regularly is the outcome one should expect.
So again, as with other headlines it is best to cut out this noise and focus on the things that are important to us. It’s best to ignore all the scaremongering and not let the doom and gloom news drag us down, and perhaps consider those who have been less fortunate than us over the last couple of years.
Turning to 2022, seeing the back of the pandemic is probably on top of everyone’s wish list for next year. Hopefully, we can focus on life after Covid and look forward to the coming year and everything we can hope it will bring with a continued spirit of optimism.