Navigating Market Volatility Series July 2025
Following two standout years for investment markets, 2025 has brought a return to more unsettled conditions. Geopolitical tensions in the Middle East have added a layer of uncertainty, contributing to bouts of short-term volatility and renewed concerns around inflation, interest rates, and global growth. Yet despite these challenges, major share markets remain near record highs — a reminder of their underlying resilience and the strength of long-term fundamentals. This presents a timely opportunity to revisit some key principles for managing through market ups and downs — and to reinforce the importance of staying focused on your long-term strategy.
Concept #6: History favours patience – markets reward long-term thinking
History shows that betting against the market rarely pays off. Since its inception, the S&P 500 Index — a widely used benchmark for US shares — has delivered annualised returns of approximately 10% per annum, recording positive returns in nearly three out of every four years. The long-term performance of Australian shares has been even more favourable for investors. As illustrated in the chart below, the S&P/ASX All Ordinaries TR Index shows that Australian shares have returned approximately 13% per annum since 1900, with negative calendar year returns occurring only about once every five years.
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