The past 6 months have been a real tumble of events, uncertainties and market reactions.

Consider this list:

  • Russia invades Ukraine
  • Worldwide shortages of shipping, computer chips and many other items we take for granted
  • Oil rises by 60% and then recently falls by 20%
  • US inflation, from the factors mentioned, as well as an overheated economy, soars to 40 year highs and interest rates start rising rapidly
  • The US Dollar strengthens to parity with the Euro for the first time in 20 years
  • China’s growth falters, due to zero Covid policy lockdowns, falling to 0.4% for the past quarter
  • The UK struggles with staff shortages, leading to disruptions to travel and other services
  • Boris Johnson is forced to resign at a time when the UK needs stability
  • South Africa suffers the worst level of loadshedding so far


There were warning signs, but neither the fallout of Covid, nor the impact of unprecedented stimulus of many economies, was fully appreciated. Investors in general were unable to predict the knock on effect of interest rate rises following 13 years of falling or super-low interest rates.

A groundswell of opinion builds up to spook the market, falling by over 20%, until the herd again takes courage and we see the markets start climbing back up.

Looking back at the 8 major market crashes (20% or more) over the past 60 years, the recovery in the following year was between 20% and 40%. This is a typical pattern, and we have no reason to doubt that this could not happen again.



Another phenomenon is a mathematical one; inflation is measured over a year, so by the fourth quarter, the US inflation jump will be built into the base and the rate of inflation (Increase in prices) will moderate and start falling. This could lead to a feel-good effect with investors and the markets may well start recovering from that point. Fund managers love investing at the point of most pessimism so there should be an increase in demand for shares.



As always, our stance is to remain invested during periods of turbulence and to leave it to the fund managers we trust, to navigate the way through.