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"Markets always go up." It’s a comforting phrase often used by investors to justify sticking to their strategy through turbulent times. But is it true?   In his latest annual letter, Larry Fink, CEO of BlackRock noted that the first stock exchange opened in Amsterdam in 1602. Fast-forward over 400 years, and according to Investopedia, there were around 80 major stock exchanges globally in 2023 , with millions of investors participating in financial markets daily.   We’re all familiar with the classic upward-sloping line in investment brochures – a visual shorthand for the long-term growth of markets. But history tells a more nuanced story.   A History of Stock Market Crashes   Markets don’t go up in a straight line. Over the past century, several dramatic market downturns have occurred. Here’s a reminder of some of the most significant crashes:   Wall Street Crash, 1929  – Between 1921 and 1929, the Dow Jones Industrial Average surged sixfold. But by 1933, it had lost nearly 90%  of its value from its peak. The Great Depression followed, lasting for years. The Kennedy Slide, 1962  – After a strong 27% rise in US markets during 1961, investors were stunned by a 5.7% drop in a single day in May 1962. Over the subsequent months, the market declined by more than  20% . Oil Crisis Bear Market, 1973–74  – Triggered by the OPEC oil embargo and high inflation, the S&P 500 fell 48%  in less than two years. Black Monday, 1987  – On 19 October 1987, the Dow Jones dropped 22.6% in a single trading day , the largest one-day percentage fall in its history. Dotcom Bubble, 2000–2002  – The Nasdaq Composite skyrocketed by over 400% between 1995 and 2000, only to fall by nearly 80%  by 2002 after the tech bubble burst. Global Financial Crisis, 2008–09  – At the depths of the crisis in March 2009, the Dow had fallen more than 50%  from its pre-recession highs. COVID-19 Crash, 2020  – Markets reacted sharply to the global pandemic. The S&P 500 fell 34%  in just over a month before an unprecedented rebound.   Other notable events not covered here include the Asian Financial Crisis of the 1990s, the aftermath of 9/11, and the 2018 Cryptocurrency Crash . Each of these periods brought uncertainty, fear, and significant losses for many investors.   The Dangers of Short-Term Thinking   Despite these crashes, markets have indeed recovered over time – and often gone on to reach new highs. However, the path is rarely smooth.   One striking shift in recent decades is the increase in the length of time investors hold onto their shares . In the 1950s, the average holding period for shares was around eight years . Today, it's closer to 5.5 months . That’s a massive reduction, reflecting not just technological change and easier access to trading platforms but also a cultural shift towards short-termism .   With this mindset, there is an implicit belief that we should only hold assets that are increasing in value. However, in doing so, investors often fall into the trap of performance chasing – selling underperforming assets too early and buying into winners too late. Moreover, if all the assets in your portfolio are highly correlated (moving up and down together), you’re likely exposing yourself to greater downside risk.   Evidence for Long-Term Growth   So, do markets always  go up?   The short answer is over the long term, yes – historically. But not without risk .   A chart from J.P. Morgan's Guide to the Markets clearly illustrates this point. Over one-year periods , the range of returns for US equities spans from a high of +61% to a low of -43 % . But over 20-year rolling periods , the range tightens significantly – between +18% and +4% annualised. This highlights the importance of time in the market  over trying to time the market.   Diversification also matters. Holding a well-blended mix of asset classes – equities, bonds, alternatives, and even cash – means you’re less reliant on a single part of the market. While it may mean forgoing some upside during market rallies, it can significantly mitigate the pain during downturns.   Key Takeaways for Investors   Markets are volatile in the short term , but history shows that long-term investors have been rewarded with positive returns. Short-term thinking is dangerous  – not just emotionally but financially. Constantly checking and reacting can often lead to poor decisions. Diversification is your friend  – a well-constructed portfolio that blends different assets and styles is more resilient. Know what you own and why  – understanding how your portfolio is designed can help build the confidence to stay the course.   Final Thoughts   Markets don’t always go up in the short term. They crash, correct, and recover – often dramatically. But over the long term, patient investors who avoid short-term knee-jerk reactions and focus on building diversified portfolios are far more likely to experience the benefits of compounding and capital growth.   So, the next time you see a chart with a nice upward slope, remember: the line only goes up because  it weathers the drops.

At QuantQual, we've been actively engaging with fund managers this quarter, introducing a range of strategies to enhance investment outcomes through our roadshows. We’re also preparing to release a series of short podcasts focusing on the use of alternatives in portfolio construction. This quarter's white paper explores a crucial topic: the power of blending .   The Rise of Index Funds and the Need for Ongoing Research   Index funds have experienced significant growth over the last 15 years, as highlighted by the Investment Company Institute’s 2024 Fact Book . While the rise of index investing has led to increased popularity, there's a common misconception that less research is necessary. It’s essential to remember that while investments are a critical part of the financial planning process, index investing still requires due diligence and thoughtful research .   Chasing Performance: The Risks of Overweighting the US Market   In recent years, some investment strategies have exhibited a pronounced skew towards the US market, resulting in strong performance. However, there are no guarantees this will continue in the future, and such strategies may increase risk for clients . Our white paper presents a balanced approach, combining various investment strategies to mitigate volatility and maximise returns.   The Benefits of Blending Investment Strategies   In our white paper, we explored the concept of blending investment strategies—combining the Magnificent Seven (top US stocks) , the Roaring Dragons (top UK stocks) , and the Granolas (European defensive leaders) . Over five years, this blend delivered a return of 21.71%  compared to 39.88% p.a.  with the Magnificent Seven, but with half the volatility . By blending these strategies, investors can achieve a more balanced return  while gaining exposure to cheaper segments of the market , which may outperform in different market conditions.   What Is Blending?   Blending involves combining different types of investments to create a diversified, robust portfolio. It's not about finding a group of funds that all deliver similar returns; instead, it’s about achieving optimal diversification across asset classes , geographies , and investment styles . Here are a few common blending strategies:   Passive vs Active Indexing : Traditional passive strategies track an index, whereas smart beta strategies adjust weightings based on factors such as value, momentum, or quality, potentially offering higher returns with lower risk. Active-Passive Pairing : A well-constructed portfolio may pair a broad global index fund (with a heavy US weighting) with an actively managed global strategy that seeks opportunities in underrepresented regions or sectors. Multi-Asset Investing : By incorporating fixed income , alternative investments , and factor-based equity strategies , investors can enhance resilience across various market conditions and smooth out portfolio performance.   Overcoming Behavioural Bias   Blending strategies also help mitigate the psychological traps investors often fall into. Behavioural bias  can influence investment decisions, leading us to seek evidence that confirms our existing beliefs. For example, many voices on platforms like LinkedIn claim that active management is dead ; however, blending strategies provide a way to separate from this noise and make more objective, data-driven decisions.   For more on this, listen to our podcast with Emma Mogford  from Premier Miton, where we discuss behavioural bias  and how to overcome it in investing.   Conclusion: The Future of Investing Lies in Blended Portfolios   In our white paper, we outline how blending can:   Enhance risk-adjusted returns Mitigate downside risk Diversify across asset classes , geographies, and investment styles Leverage AI & quantitative research  for smarter decision-making In short, the future of investing is about intelligent portfolio blending —combining the best of multiple strategies to optimise long-term outcomes. Read our white paper for more detailed insights on how blending can improve your investment strategy.

As I begin writing a new chapter in my upcoming book on the psychology of money , I find myself focusing on a critical theme: our relationship with money and the importance of controlling it—rather than letting it control us.   This chapter will examine the actual value of financial planning, a topic that has undergone significant evolution over time. In this blog, I’ll share some key insights that financial planners—and their clients—can use to understand better what planning means today.   What Is Financial Planning?   Historically, “financial planning” was often limited to product selection. You took out a pension, bought life insurance, or signed up for an endowment plan—with little clarity on whether it was the right fit or whether you were on track to meet your goals.   Over time, the focus shifted to investing. Financial planning became synonymous with portfolio performance. I helped build a successful business around that model—one that genuinely delivered above-market returns during my tenure.   But the world has moved on.   Today, financial planning is no longer about beating the market. It’s about understanding the person behind the money —their goals, challenges, and lifestyle—and building a long-term plan that supports them.   Is DIY Investing Cheaper?   DIY investing appeals to those focused purely on cost. It promises control and lower fees—but it also requires you to do everything yourself:   Develop your own financial plan Select the right investments Manage your future through every life stage   There’s ample research to show that we are not always the best decision-makers when it comes to money , especially when emotions, biases, or economic shocks are involved.   What Does a Financial Planner Provide?   It can be challenging to accurately articulate the value of financial planning. That’s why we encourage planners to create an Annual Fee Expectation Statement —a clear summary of what clients can expect in return for their ongoing fees.   Here are just a few of the tangible benefits clients receive:   Four Core Elements of Value:   Ongoing Expert Advice  – This is more than a one-time meeting; it's continuous, tailored financial support. Long-Term Security  – Strategies to grow, preserve, and transfer wealth across generations. Tax Efficiency & Risk Management  – Structuring finances to minimise tax and manage downside risk. Peace of Mind  – Confidence that professionals are looking after a client’s financial life.   What Else Is Covered by the Annual Review?   Regulatory Fees  – Supporting FCA-authorised and compliant services. Professional Indemnity Insurance  – Protecting both clients and the business from financial risk. Compliance & Reporting  – Ensuring advice meets regulatory and ethical standards. Technology & Security  – Robust systems that protect personal data and deliver modern advice. Holistic Financial Planning  – Covering pensions, tax, investments, protection, and estate planning. Retirement & Wealth Strategies  – Planning for financial independence and sustainable income. Unlimited Support  – Access to an adviser when needed — not just once a year. Market Monitoring & Updates  – Insights that keep the client informed in a changing world.   Conclusion: The Value of Advice Is Clearer Than Ever   At its core, financial planning is about improving lives, not just portfolios . It provides clarity, structure, and support in a complex financial landscape.   Whether you're a financial planner communicating your value or a client wondering what you're paying for—an Annual Fee Expectation Statement can be a powerful way to make that value visible.

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