Regime shifts and contrasting extremes

The continuing story of 2022 is markets wrestling with the first global rate-rising cycle for 15 years alongside inflation that’s out of control and continually surprising – but you probably know that already.

And that’s before we even start getting into politics and geopolitics. Long-term investors always need to raise their gaze above the immediate events and figure out what really matters for the longer term.

Many commentators worry about interest rate rises, and a developed market cost-of-living crisis, causing a painful recession. Many in financial markets are focused on the next inflation or consumer-spending data to try to guess what the central banks will do next.

It’s a lot to wrestle with, and it’s a bit of a cliché to say we’re at an uncertain moment, but that is always the case. Unexpected and rare things happen all the time. As unsettling as this sounds investors need to come to terms with uncertainty.

Legendary investor Howard Marks says: “We might not know where things are going, but we sure ought to know where we stand”. And that seems like as good advice as any to build on for investors.