We’re due a crash
There’s going to be a recession in the next few years
There’s a crash every 7 years, we are long overdue one
We hear this all the times from commentators and investors, trying to predict the future. It is as if they are willing another 2008, which still makes me break out in a cold sweat. Not only was there a global recession, there was mass unemployment from all types of industries. Add into that, people were up to their necks in debt too, many of which are still stones around peoples necks. We definitely don’t want to go back there so we can buy cheap stock!
The stock market has done well since then but it is not without its shaky periods:
The global economy shut down as Covid-19 spread across the world at a rapid pace, killing millions of people. Travel was restricted, people couldn’t go to work, businesses had to reconfigure how they did things (Work from home was born). Goods couldn’t be shipped around the world, so supply chains were severely disrupted.
Stock market prices fell -28.16% in just one month. That is a rapid drop in values and we didn’t know when it was going to stop falling. Thankfully central banks stepped in and pumped the economies with money and markets started to recover. Markets actually posted positive returns for 2020 at 6.25% for the year. If you invested just as the markets started to crash, you only would have lost -1.01% for the year.
As economies started to come out of Covid, there was a huge demand on raw materials to get production up and running. This lead to increased demand on shipping to get the good across the world. The basics of economics is supply and demand, so costs of everything went up.
Russia also invaded Ukraine and sanctions on Russia followed. Russia is one of the main suppliers of energy to Europe and Ukraine is a massive producer of food. There was a scramble to ensure that Europe would have enough energy to function. The stock market ended the year down -12.85%
This year, Trump decides that he is going to impose tariffs on every country that trades with the US. Markets don’t like barriers to trade. They also don’t like uncertainty, so his continuous pauses to the the tariffs didn’t go down well. Markets fell -17.8% in two months. Year to date, markets are up 2.71%.
We are seeing different behaviour from clients than previously. They have more structure around their money. They are not investing all their capital, keeping some of it in reserve for a rainy day. This can be used if they need it and they don’t need to call on their investment money.
There is less debt. After 2008 and the mess that it left, people are only taking on debt where necessary. This includes with investments. Gone are the days of mezzanine finance geared property funds. Investors are just investing in the biggest and best companies in the world.
Investors are more patient and are staying the course. They know that there are falls in markets. Since 1980, on average, the market falls in value by -19% at some point each year. We are not seeing investors move out of their investments when these falls happen, there is no panic. Investors understand that switching in and out of funds is a surefire way of losing money. Invest in quality assets and you will make money in the long term.
Well done to everyone for staying invested.
Steven Barrett
29 September 2025