Alan Steel
01506 842365
MENU
  • Home
  • About Us
    • Close
    • About Us
    • What We Do
      • Close
      • What We Do
      • Our Services
      • Our Philosophy
      • Our Awards
      • Our Reputation
    • Who We Are
      • Close
      • Who We Are
      • Meet the team
    • Our Approach
    • Financial Planning
  • Testimonials
  • Investments
    • Close
    • Investments
    • Investment Advice
    • Portfolio Building
  • Pensions
    • Close
    • Pensions
    • Retirement Planning
    • Early Retirement
    • Pensions as simple as...
  • Tax
    • Close
    • Tax
    • Tax Advice
    • Tax Planning
    • When I'm Dead and Gone
    • Inheritance Tax
    • HMRC Digital Accounts
  • Insights & Media
    • Close
    • Insights & Media
    • Letters from Linlithgow
    • Informing You
    • Letter from America
    • See us in the Press
    • Master Investor
    • Points of Few
  • Contact Us
Independent financial advisers founded in 1975
Over £1.4 billion client funds under management
17 industry awards for advice since 1989

See us in the Press

September Investor Blues?

Wednesday, 28 September, 2016

Written for publication on Daily Business Website
19 September 2016

I assume I’m not the only one who noticed that a couple of unwelcome anniversaries have just slipped by.  Didn’t spot it in the headlines though.  Seems to me commentators right now are either obsessed with last week’s “big” collapse in share prices that kicked off on the 9th in the US when the Dow Jones posted a one day two and a half per cent drop, or they still have their knickers in a twist about investment charges.

What anniversaries?  Well for starters last Friday was the fifteenth anniversary of 9/11. Remember that?  Don’t know about you but I recall exactly where I was, and the shock felt by me and my colleagues as we watched that second plane slam into the World Trade Centre.

The fifteenth of this month was the 8th anniversary of the sudden collapse of US Bank Lehman Brothers.  That in turn escalated over days into the worst financial crisis since the October 1929 Wall Street Crash which triggered the Great Depression of the 1930s.  For those who think a one day fall of 2.5% is a reason to panic, how about a 14.3% fall on 9/11, or an 18.8% fall after Lehman Brothers went down the tubes, never mind the 43.7% collapse in October 1929.

Yep, September and October aren’t typically clever months for investors despite what Mark Twain said about not investing in equities any month.

Going all the way back to 1900 September has the dubious record of being consistently last in Stockmarket performance.  Taking the Dow Jones Index again as an example (and why not given what happens over there is mirrored here) it has risen in September only 43% of all years.  The average loss isn’t all that bad though at minus 1%.

October lies in second last place, but despite the famous and heavy falls associated with the month over the years, it boasts rising stockmarkets 57% of the time, slightly below the norm for all months.  And remember that’s a 116 year period.

Since 1900 data put together by Ned Davis Research show there’s been 53 “crises” impacting stockmarkets over the last 116 years, but only 42 of them led to first day falls. One third of them were in September and October, twice what the Law of Averages would suggest.  Is that why Autumn is referred to as The Fall?

Do you think it could be anything to do with the fact that by far the biggest capitalised stockmarkets are in the Northern Hemisphere?  Maybe us northerners get increasingly depressed as we look forward to longer nights and crappier weather.

Whatever.  Here’s some of other first day reaction falls of “crisis” events from the NDR list….. October 1973 Arab Oil Embargo, down 18.5%, October 1987 Financial Panic, down 34.2%, and September 1992 ERM UK crisis, down 4.6%.

Want some good news?  History shows that within 9 months the average gain was 16.9%.  History also shows that in 85% of the time since 1900 Stockmarkets have been in Bull Markets.  (that’s jargon for rising values)

And NDR who recommended back in August 2008 before the Lehman collapse that investors be cautious, with only 40% exposed to equities, are still recommending now to hold equity exposure at 70% their maximum optimistic position.

As to charges, if you google “fund charges” you get 232 million results.  Then google “the benefits of active management” and you only get 4 million.  Right now there’s 58 times more interest from investors in cutting costs than in improving net investment performance.

While I appreciate there are funds and pension plans that under -deliver and over- charge, usually simultaneously, there’s enough fund managers and advisers out there who work hard at a fair price to deliver superior performances for long standing clients who pay no attention to sexy or scary headlines or September and October “crises.”

So when you are approached by folks assuring you that average tracking funds beat all comers in the active sectors go check for yourself, and ask yourself this… when was the last time an average tennis player won a Grand Slam?

An edited version of this article appeared on the Daily Business Website on 19 September 2016.

©2023 Alan Steel Asset Management Limited is authorised & regulated by The Financial Conduct Authority. Please note that the Financial Conduct Authority does not regulate some forms of tax advice. Company Registration: SC58014

You should remember that the value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The investment services and/or investments referred to in this website may not be suitable for you. If you are unsure we suggest you contact us to discuss matters further. If we believe our services are not right for you we will tell you.

When investing money, whether for income or growth, you are placing your capital at risk as the value of investments may vary, so you could get back less than you started with.

The Financial Conduct Authority does not regulate Tax Advice, Trusts or wills. Alan Steel Asset Management Limited is authorised and regulated by the Financial Conduct Authority. The guidance contained in this website is subject to the regulatory regime of the UK.

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients.

FOS details can be found at www.financial-ombudsman.org.uk

Alan Steel Asset Management Limited are not responsible for the content of external sites.

  • Cookie Policy
  • Privacy Policy
  • Website terms and conditions
  • Tax Services Privacy Notice
  • Contact Us

This site uses cookies. By using this site you agree to the use of cookies. Read our Cookie Policy