Human Behaviour vs. Trusting the Market: How to invest wisely 

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Last updated: August 4, 2023

When the media whips up a frenzy of negative headlines, it’s no surprise that people begin to worry about their investments. This year alone, titles referencing market downturns and economic crises have graced the front pages many times more than positive stories. 

It’s natural to feel concerned about your money during these times, but I hope to provide some reassurance here. Let's focus on the philosophy of staying in your seat during economic downturns and trusting the market to do its work. After all, in the past it has prospered more than it suffered, meaning withdrawing cash in a panic during low periods would not have been the smartest idea. All this to say, the media is known for scaremongering, but looking at the theory and evidence shows us that there is good potential for your investment to recover, perhaps even grow. 

To further explain our philosophy, we should touch on the importance of having a diversified portfolio. We’ve written a blog about diversification here if you want to read up on it in more detail. But, for the sake of this guidance, I’ll skip straight to the part about trusting the market.  

In a moment, I’ll share some useful graphics which illustrate the positive returns over the long term that markets provide when your portfolio is diversified. 

All our clients are invested in a well-diversified, global portfolio of the world’s greatest companies with over 10,000 individual shares. In addition to this, they are only invested where the money is unlikely to be needed for three years +. 

The first chart I want to share is called ‘The Wall of Worry’.

It shows the growth in world equity markets since 1993. Despite the global events we see in the news, it shows that if you stick to the plan and remain invested, you’ll achieve a positive return. In this scenario, $1 invested grew to $5.23. If you re-invested the dividends (which we recommend) that equates to an annualised return of 7.50%. 

Therefore, if you have time on your side when investing (even if you’re 65, it could be a 30+ year plan) it’s only human behaviour, or bad management, that can generate a low return consistently.  

There are always exceptions of course, you may need money urgently at a time when markets are misbehaving, but overall, it’s important to have a plan and stick to it.  

The second graphic shows the short-term return in July for UK, US and global equities.

It is one that we can update each month as the figures change. It also states the important figures of 30 year returns in the same markets. This rarely changes and it highlights the benefit of remaning disciplined.  

The final graphic is a powerful one. It summarises global markets since 1973 and whether they ended the year positively or negatively.  

As you can see, there is a lot more green than red on the page, but if you sell during the red periods, you’re going to miss out on the subsequent recovery. In total, 14 of the 50 years ended in the red, with 36 ending in the green. Not bad odds are they?  

You’ll also see why we recommend holding 3 years of spending via a low-risk asset, such as cash, so you can ride out any longer-term negative returns.  

To summarise, the key benchmark you should focus on is achieving your goals and objectives and we can demonstrate this over the long-term through cash flow planning. If markets are positive or negative over 1, 2 or 3 years, it really doesn’t matter. If you remain invested, stick to the plan, and follow the evidence, you will be rewarded and achieve a positive return over time. 

Thanks to Humans Under Management Ltd. for the images. 

This content is for information purposes and should not be treated as financial advice. We would always recommend speaking to a professional before making decisions regarding your wealth.


The value of investments can fall as well as rise and you may not get back the amount originally invested. Past performance is not a guarantee of future results. Values change frequently and past performance may not be repeated. Even a long-term investment approach cannot guarantee a profit.