Uncertainty - When to Invest

It’s normal to feel hesitant about investing when the mood is uncertain. You may fear it’s not a safe time to be putting money into the markets. However, despite times of market weakness (or strength), Property and Share Markets have a habit of consistently reaching new heights. 

As financial advisers and investment specialists, we appreciate an investor’s hesitancy. It’s not easy. But when all’s said and done, investing is about foregoing today’s consumption, to preserve our lifestyle for tomorrow. It’s all about tomorrow and so, we simply have to decide which tomorrow we want to protect?

Working pays us a cash flow that takes care of today. So inevitably with our investing, we’re talking about a tomorrow that is often a very long way away. So what does it matter if markets pull back the next day (literally, tomorrow)? When markets dip, we need to have the courage to find more of “todays” surplus cash flow, to push into what are likely then, some good assets, at sale prices. 

We’re all getting on with the task of living, producing, consuming and enjoying - the value of Share and Property Markets simply reflects this. In terms of market value, what happens tomorrow is completely out of our control and impossible to “time” or predict. 

What we can control is “our timing” and “our asset selections”. On both counts, we will use every ounce of our expertise to get each right, and we know that if we take a long-term view and we pick quality, the rest will follow. So, don’t worry about what the newspaper publishes, or the TV proclaims. They’re not interested in your investments, they want to sell news and usually, it’s bad news that sells best.

Financial Markets are complex, but essentially, they represent business, community and even society. It’s natural that some businesses will fade while others expand, hence we diversify. We can never be fully insulated from what happens in the world and indeed, we don’t want to be. Consequently, everything is interconnected, the wins and the losses. 

As investors, we’ll likely have a local bias, but we should be cautious in this, as NZ’s share market makes up less than 0.2% of global markets. In 1987, NZ led the world into “Black Friday” - for our recently deregulated economy, it was a massive blow to an irrationally overvalued market. The NZ exchange took nearly two decades to fully recover. By comparison, Japan and the US traded their way out in a matter of months, many other countries taking only a year or two...

Step into our time capsule, as we ponder 40 years of significant volatility:

• [1989] Japan Asset Bubble Pops (property & shares collapse) & India Economic Crisis (balance of payments crisis);
• [1990] Finnish Banking Crisis (severe systemic liquidity crisis); 
• [1994] Mexican Economic Crisis (the "Tequila Crisis" peso devaluation); 
• [1997] Asian Financial Crisis (currency collapses across East Asia); 
• [1998] Russian Debt Crisis (Ruble devaluation & sovereign default); 
• [2000] Tech Wreck (dot-com bubble bursts & subsequent recession);
• [2007] Global Financial Crisis (subprime meltdown); 
• [2010] European Sovereign Debt Crisis (incl Greek govt debt); 
• [2014] Brazilian Economic Crisis (deep stagflation & recession); 
• [2015] Chinese Stock Market Crash (A-share bubble bursts); 
• [2017] Brexit & Trump Trade Wars (global trade policy disruptions); 
• [2018] Turkish Currency Crisis (Lira plunge & debt defaults); 
• [2020] COVID-19 Pandemic (global lockdowns & market crashes); 
• [2021] US Bond Market Crash (largest fixed-income drop since 1788); 
• [2022] Russia’s Invasion of Ukraine (global energy & inflation shock); 
• [2025] “Liberation Day” Tariffs (new trade barriers & policies); 
• [2026] Current Gulf War / Iran Conflict (Strait of Hormuz blockade & energy crisis)

And so, which year was “normal”? 

Here’s the thing and the reason for the history lesson: since 1987, the global share market has averaged between 8% and 10%pa. So, if in 1987, we simply invested and held through all of the uncertainty, $100,000 then, could now be worth between $2,172,000 and $4,525,000. It’s time in the markets that matters.

The views and opinions expressed in this article are intended to be of a general nature and do not constitute personalised advice for an individual client.