MARKET REVIEW FOR OCTOBER 2018

2018 has, as ever, been a year of change. Whether at home with Brexit or overseas with the US presidency, an air of uncertainty has caused markets to falter, first in early spring and more recently, in the past week. This came to a head, with the FTSE 100 hitting a low of 6995 on Friday 12th October (Source: BBC News.), however this was still not the lowest point of the year. Over the short-term, this may feel extreme but is nothing we have not experienced before.

The graphs below show the performance of our “Hybrid” portfolios over the past month and 5 year period. As you can see, the drop we are currently experiencing for October, mirrors a similar turn of events we recovered from earlier in February this year.

Past performance is not a guide to future performance; the value of an investment and income from it can go down as well as up.

This is all part of the market cycle. It is only by focusing out to 5 year performance that you can get a real perspective. Since 1985, there have been 10 instances of similar circumstance occurring, where the FTSE All Share Index has fallen by more than 10% on a total return basis over a calendar quarter. Furthermore, over the last 5 years the FTSE 100 has experienced 117 weeks of negativity, compared against 143 weeks of positivity.

“ This kind of volatility is a blip in the long-term performance. Anyone that tries to trade over this short-term will eventually lose money, as it is simply too unpredictable. Portfolio values are meeting expectations and the global economic backdrop remains positive.”
- Ed Fairey, MD of Fairey Associates Ltd 17/10/18

The reasons for this recent correction are wide ranging, but the fallout has been felt globally. Most of us are now used to the inflammatory comments (whether you agree with them or not) of the US President, but the markets still brace on his word. President Trump last week went on record to say the Federal Reserve had “gone crazy”, as interest rates rose. Closer to home, an impending dispute between the Italian Eurosceptic government and the EU is due to unfold over the coming weeks.

“Brussels, the political heart of Europe, could prove the center of global market focus next week as Italy’s budget and Brexit talks overshadow economic data and central banks.” 
- Philip Blenkinsop, Reuters 12/10/18

The economic turbulence of this quarter is ongoing. With all the information at our disposal, the recent market fall should not come as a surprise. The success of our clients portfolios will always be our priority and at this time, I do not feel there should be any need for panic. Our in-house investment committee is continuously reviewing our fund range to ensure their suitability to your long-term goals. As always, any immediate concerns should be directed to your Financial Adviser, who will be more than happy to explain in their own words the current situation. 


Ed Fairey BSc (ECON) Hons, APFS

Chartered Financial Planner

Managing Director

The details provided in this statement are for information only and do not constitute personal advice.