Staying invested

Over the last 12 months we have been doing work and raising the awareness of investors staying invested through the cycle.

No one knows what 2024 will have in store for us with market commentators predictions ranging from deep recession to strong returns (19 of 23 years the S&P provided positive performance in an election year).

This chart is from JP Morgan showing 20 year annualised returns by asset class. The difference between what an average investor achieved (orange) vs 60/40 portfolio (blue) highlights an important theory on investor behaviour.

Investors tend to overreact to existing market conditions; selling when volatility increases and buying on the back of market strength. Every year the market has rough patches but it's important to stick to a plan and try to look through the noise. Recency bias can be somewhat countered if you stay disciplined and set clear investment goals.