Good investment news doesn’t sell newspapers – A story of perspective

If you search online for the headline ‘wiped off the stock market’, you will be faced with countless tabloid news outlets sharing headlines such as;

‘£133bn wiped off FTSE 100 this week’,

‘Billions wiped off FTSE 100 as fear of…’

and ‘Market rout wipes more than £51bn off FTSE 100’.

You could be forgiven for thinking that investment markets are in crisis almost every day!

Although investment markets have more up years than down, the situation in April 2025 did feel like a never-ending series of crises and news outlets were more than happy to shout from the rooftops about it. The main stock markets around the world were down over the course of the few weeks in April, but nothing out of the ordinary for investment markets.

The ups and downs seen in the stock market were in-keeping with what we would expect given the Trump tariffs, uncertainty around the war in Ukraine, middle east and instability in major governments. Disappointing, but nothing out of the ordinary.

A mere few weeks later, in July 2025, the FTSE 100 rose above 9,000 for the first time in its history. Although it made the news, it didn’t feature nearly as prominently as a market crash. We didn’t see a ‘Billions wiped onto the stock market’ headline. Most of the coverage was from industry experts trying to highlight the lack of interest from the usual tabloid press.

So why, if all of these crises around the world are still ongoing, have we had a strong run since April 2025?

Markets are forward pricing machines and they often react positively to what is seemingly still negative news. The news just needs to be less bad than it was before, for example relative stability in government, Trump’s less aggressive negotiating position and interest rates slowly falling.

Each security price reflects the collective knowledge of all market participants, and the information available in April 2025 was brand new but predominantly negative with gloomy forecasts of trade wars, and the possibility of economic turmoil. The fact that these forecasts have eased a little has helped markets rally over the past few months. Volatility is still around and it doesn’t look like being a smooth ride upwards, it is exactly what we expect from markets.

The good news is that by adopting an evidence-based approach to investing you don’t get caught up in the emotion of all the headlines.

Instead of yearning for a crystal ball, you can be reassured by decades of data which show that over the long-term, buying and holding the market rather than trying to outsmart it wins in the vast majority of cases. Paying fund managers to pick individual stocks they think will out-perform simply adds cost and erodes value over any significant period, as evidenced by the most recent SPIVA report (a twice-yearly report by Standard & Poor’s measuring active fund managers against their chosen index).

It shows that almost 90% of (GBP) European funds investing in US equities underperformed the S&P500 index over 5 years, increasing to over 97% over 10 years. Global Equity funds didn’t fare much better, with over 93% underperforming over 5 years, and 97% over 10 years. This equates to a worse than 1 in 10 chance of picking a fund that survives for that time period and out-performs its benchmark index.

Our evidence-based approach to investing allows you to take any negative tabloid news with a pinch of salt and new ‘all time market highs’ in your stride, safe in the knowledge that markets are your ally not your enemy over the long-term. Sticking to a robust investment strategy as part of a highly personalised financial plan still provides your best chance of success.

If you would like to discuss our investment approach or any other financial planning subject in further detail, please contact us on 0131 220 0000 or enquiries@carbonfinancial.co.uk

The value of investments and the income derived from them can fall as well as rise. You may not get back what you invest.

This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice. You are recommended to seek competent professional advice before taking any action.

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