Let’s face it: these are turbulent times. We’ve said before that the news tends to sensationalise and focus on the negatives, but there are a lot of easy pickings out there. And there are plenty of unsettling headlines for investors, stirred up by policy actions in the US and uncertainty around the world.
Volatile markets are, however, nothing new. The current choppy waters are a reminder that investing isn’t always smooth sailing. Like any good sailor, investors need patience and stoicism, combined with a well-structured portfolio that’s built to go through storms.
Here are four key principles we applied when we built the Goodmans portfolios.
1. Global diversification
The funds in Goodmans portfolios invest in over 10,000 individual companies around the world, which means that our portfolios are very well diversified. If money comes out of one sector and into another, we are covered. If one country does poorly or their currency struggles, then we are covered. Diversification is often called the only free lunch in investing, and it's essential if we are going to avoid speculation and reaction to markets.
2. Diversification across assets
While the evidence shows that global equities are the real money-makers for a portfolio (and deserve to take up more space), the defensive portion acts as a steady anchor. As lower risk assets, bonds and cash offer lower expected returns, but they can help smooth the waters when other markets get choppy. A bonus is that there’s often a tendency for defensive assets to go up when equities drop, helping to offset some of the declines on the growth side. Investors who panic often run to the safety of bonds, pushing up prices. This appears to be happening with this current market drop.
3. Being sensible about risk
Call us boring if you like, but we’re not ones for chasing the latest fad or trying to time the markets. Our thorough and robust investment process is based on trusted research, years of historical evidence and decades of experience to generate steady, long-term growth. This measured approach may not get the heart racing, but by avoiding any level of deep risk it means changes in value in troubled times are just temporary. So, as with other storms, this too will pass.
4. Patience and discipline
In the wise words of one of the world’s best-known investors, Warren Buffett: “The stock market is a device for transferring money from the impatient to the patient”. It’s only natural to feel nervous when your money isn’t thriving, but if you pull out and sell when markets are low, you’ll miss out on the eventual upside. Likewise, if you buy high, you’ll find it harder to realise returns on your capital when markets start to settle down.
At Goodmans, we buy across the whole market and hold it, not trying to guess where or when we should invest next or indulge in knee-jerk reactions to any market noise. Being a stoical captain and sailing through the storms is the way returns are earned over time. There’s evidence to prove it.
Not always plain sailing
The unfortunate truth is that bad weather and a level of discomfort is par for the course for investors. No-one can predict where things will go from here, but we do know that significant storms have struck before and markets have always recovered. Even catastrophic events over the last 25 years, such as the 9/11 attacks, the second Gulf War and Covid pandemic, have failed to reverse the upwards trend of global equities over the long term.
In the chart below you can see the returns of global equities – alongside the biggest intra-year drop – every year since 2000. It shows just how common it is for the market to fall 10% or more during the year – 15 out of 25 times! Despite the falls, most years still ended positive.
Time and again, markets have proven their resilience.
Chart: Annual global equity returns and the biggest intra-year falls, Jan 2000–March 2025
Source: Albion Strategic Consulting
Steady as she goes
Although the headlines can be alarming, we’ve been here before, and we’ll no doubt be there again. As long as you’re invested in a well-considered, long-term and diversified portfolio matched to your needs and appetite for risk – that’s a ‘yes’ for Goodmans clients! – there’s no need to change course with your investments. At times like this, there can even be opportunities to turn the turbulence to your advantage.
As a financial planning firm celebrating our 30th year in business, we’ve seen a few investment storms over the years… and weathered them all. While it’s natural to feel nervous at times like this, our clients can rest assured that the good ship Goodmans is built to last and is on course to steer you towards your goals, whatever the weather.
