Investing for the long term
If you’re investing for the long term, remember to keep your long term in focus.
Equity market performance in 2020
- 2020 was a stark reminder of the risks involved in trying to time an entry into, and exit from, equity markets.
- In January 2020, few people in the investment community could have foreseen that a global
pandemic would significantly impact our lives and livelihoods and result in a sharp global
recession. Even with perfect foresight that a pandemic would occur, it would have been hard to
correctly predict how equity markets would perform during the year.
- A sharp but brief decline in major equity markets was followed by an equally sharp and swift market
recovery, which resulted in all indices shown in the chart, ending the year higher than they started.
- The financial market crisis prompted by the pandemic was deliberately rescued by
unprecedented government stimulus. However, we are reminded that, as with previous bear
markets, investors who have appropriate investment strategies for their investment objectives
and time horizons will be well-served in the long term by staying invested, despite the
emotions that naturally arise in times of great uncertainty.
- Read The structure of market drawdowns: part II on page xx for deeper insight and analysis into
equity market behaviour.
Economics & Markets