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UK stock market at risk of “worst month on record” as volatile shares sell-off again

Posted by Adrian Lowcock in Press releases category on 21 Mar 20

  • UK markets on course for worst month on record
  • Global markets on course for third worst month ever
  • However, holding stocks for 10-year periods has historically been a very successful strategy, meaning investors should stay the course if possible
The UK market is on course to see its worst month on record this month as the coronavirus and the corresponding shutdown around the globe sends equity markets reeling, according to Willis Owen.

The UK’s leading index is currently down over 20% month-to-date, just shy of the 26.04% it dropped in October 1987 in the wake of Black Monday.

However, with two more weeks to go and the outlook yet to improve, the crisis could see March 2020 become the worst session on record.

Adrian Lowcock, head of personal investing at Willis Owen, said: “So far this month is the second worst on record, but we are only halfway through the month, and given the record volatility in markets we currently have, it could easily fall further.”

Shares globally are in the doldrums, with March also currently the third worst ever for the MSCI World index.

“The speed and magnitude of the markets falls this month has been shocking and hasn’t been seen in most people’s investing lives. Even though the financial crisis shared similar elements of panic and despair, that unfolded over many weeks, and even years. The Coronavirus is a different sort of crisis - a much more humanitarian issue that will affect the global economy very differently. However, it is important to remember that we will get through this and most peoples’ lives will slowly return to normal.

“Businesses will recover, and good companies will be able to navigate through the uncertainty. Importantly, the banking system is much stronger than in 2008 and that is likely to be critical in how quickly things can recover.”

The investment platform has also looked at the total return of the MSCI World over 10 years on a rolling monthly basis since January 1990. Over this period, there were just twelve 10-year rolling periods when investors would have lost money overall if you held it for ten years, out of a possible 281 10-year investment terms. This was on 7 consecutive periods from 31st January 1999 to 31st January 2009 through to 30th June 1999 to 30th June 2009 and again for 1 month in 31st December 1999 to 31st December 2009, and then for 4 months from 31st May 2000 – 31st May 2010. 

“Essentially, investors would have made money in every 10-year rolling period but for the dotcom bubble and the Global Financial Crisis: buying around the peak of the former and selling during the slump in markets caused by the latter. Only if you had bought during the dotcom bubble and subsequently sold at the height of the financial crisis would you have lost money over a 10-year period since 1986,” Lowcock said.

“Therefore, while it appears very bleak out there now and investors will be tempted to sell everything, staying the course (and potentially adding to some markets if you think they represent long-term value) remains the best strategy.”