During the run up to events that are likely to cause volatility in the markets, such as the recent general election, there is the temptation to try and hide. To pull all of the money out of the market and sit safely in cash. As various academic studies have shown, this is a strategy that is unlikely to work.<\/p>\n
For a start, at what point do you pull out of the market? Just when will be the highest point before the fall?<\/p>\n
The other issue, is when to go back in. When have the markets reached rock bottom?<\/p>\n
The surprise Conservative election victory is a case in point. If you had pulled your money out of the markets in the days before the election, you would have missed out on the nearly 2.5% growth in the FTSE 100 that followed on the Friday.<\/p>\n
This study<\/a>, based in the US, has shown that if you had remained fully invested in the market for the past 20 years, you would have averaged an impressive 9.22% average annual return. However, if you had missed just the best 40 days during that same 20 year period, your return would actually have been negative.<\/p>\n Given that the FTSE 100 rarely has jumps quite as large as what happened on the 8th May, I suspect that this may well be one of those 40 days in the 20 years to come.<\/p>\n","protected":false},"excerpt":{"rendered":" During the run up to events that are likely to cause volatility in the markets, such as the recent general election, there is the temptation to try and hide. To pull all of the money out of the market and sit safely in cash. As various academic studies have shown, this is a strategy that… Read more »<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-1414","post","type-post","status-publish","format-standard","hentry","category-uncategorized","wp-sticky"],"_links":{"self":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts\/1414","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=1414"}],"version-history":[{"count":0,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts\/1414\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=1414"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=1414"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=1414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}