70 years ago, the BBC broadcast its first daily television news programme. Since then, round-the-clock news has become available, and you can get the latest headlines with a few taps on your smartphone. While being connected can be positive, for investors, it can make periods of volatility and choosing an investment even more difficult. Read on to find out why.
On 5 July 1954, Richard Baker delivered the latest news, which started with an update on truce talks being held near Hanoi, Vietnam, and an item on French troop movements in Tunisia. It wasn’t met with universal approval. Indeed, the BBC received feedback stating it was “absolutely ghastly” and “as visually impressive as the fat stock prices”.
Sir Ian Jacob, who was BBC director at the time, noted that there were challenges because many main news items are “not easily made visual”. However, he added that he believed it was the start of something “extremely significant for the future”.
But how does this relate to investing? 70 years ago, you may have read about investment performance or the latest tip in the newspaper or heard a segment on the radio. Now, you can find out about stock market movements in seconds, and it could lead to knee-jerk decisions.
Too much “noise” could lead to poor investment decisions
Imagine you hear about stock market volatility affecting your portfolio now. You may hear in the news how stocks are “plummeting” or that it’s the worst day for a particular index in a year. How do you feel? You might worry about what it means for your financial future. As a result, it could lead to you making rash decisions that aren’t right for you.
Yet, 70 years ago before there were daily TV news programmes on the BBC, you might not hear about the volatility right away. The market and your portfolio could even have recovered before you knew.
Being in the loop when it comes to stock market movements can work the other way too. You might see a segment about how technology businesses are doing well, and it tempts you to invest without considering how it might affect your overall portfolio or risk profile.
So, being exposed to too much “noise” may lead to investors making decisions based on short-term movements. However, if you look at some of the big events, and their impact on stock markets over the last 70 years, it indicates that investors who stuck to their investment strategy could have benefited.
The last 70 years demonstrate why a long-term view often makes sense for investors
When Richard Baker sat down to deliver the BBC bulletin, the stock market was doing well. After decades of uncertainty due to the world wars, by the late 1950s, it was booming. Indeed, work began on the new Stock Exchange Tower in 1967, which became a London City landmark at 26 storeys.
The markets didn’t remain stable though. The early 1990s brought a recession that led to unemployment of more than 12% in the UK. Then, the dot-com bubble saw technology stocks soaring at the end of the decade as investors were excited by the widespread adoption of the internet and innovative start-ups before the bubble burst in 2000.
Countless historical events have affected the markets. In the last decade, the 2016 Brexit vote and the pandemic in 2020 led to markets falling.
Despite the turbulence and the attention-grabbing headlines of the last seven decades, the overall trend in investment markets is an upward one. Once you look at the bigger picture, it suggests investing with a long-term view is savvy for most investors.
Indeed, take a look at the FTSE 100 – an index of the 100 largest companies on the London Stock Exchange. It launched in 1984 and started with a benchmark of 1,000 points. On 3 May 2024, it hit a record high at 8,248 points.
Of course, you cannot guarantee investment returns. It’s important you consider your goals and remember that all investments carry some risk. You may want to consider your risk profile and wider financial circumstances when creating an investment strategy.
Get in touch to talk about your investment strategy
If you’d like to understand how to create an investment strategy that reflects your goals, or would like to review your current portfolio, please contact us. We’ll help you build an investment strategy that reflects your goals and circumstances.
Please note:
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 30/05/2024
