One of the joys of writing market commentaries is that the markets will often make you look like a fool as soon as you press go. That is why we have always recommended ignoring them.
If you invest in stockmarkets then so far 2025 has been a Golden Year. So much so we are starting to get queries from clients about whether we are due a correction. For any adviser this is a lose-lose conversation. A stockmarket downturn will happen at some point in the next 5 years, no one knows if it will be tomorrow or in five years time. Either way the client gets to say ‘I told you so’, what is often missed is the extraordinary growth that they have enjoyed in all of the periods when we said ‘sit tight’.
This time is no different, if you move out of shares, what do you move into? Gold, Bitcoin, bonds, nothing can exactly be described as cheap right now. What about cash? Well cash is the best way to destroy the value of your portfolio but in a slow and invisible way. So the only answer is to stay invested for the long-term and ride it out. You will always be in a better position than those who keep reacting to market noise (it is never news).
It feels like wherever you turn at the minute someone is going to talk about AI and how it will change the world. Stock markets have fully bought into this thesis as AI related firms pushed equity markets upwards in a near straight line during Q3, with the MSCI ACWI returning 9.6% in sterling terms.
Emerging Markets led the way boosted by a weaker US dollar, US/China trade talks and this continued enthusiasm for AI. The Taiwanese stock market is one of the worlds lesser known stock markets but also one of the most concentrated. It’s also been one of the best performing, comfortably outpacing the S&P 500 over 1, 3, 5 and 10 years. This is largely due to one stock in Taiwan which you may not have heard of. Taiwan Semiconductor Manufacturing makes up over half of the Taiwanese stock index by value, is valued at over $1tn (five times the value of the largest FTSE 100 constituent) and is one of the most important companies in the world. It is likely you are reading this on a device with a chip made by them as they make over 90% of the world’s advanced computer chips. The company has experienced incredible growth over the past number of years and is a reminder that it’s so important to take a global view when investing – great companies can be anywhere in the world and the only way to be sure you’ve bought the next big thing is to buy them all.
As has been the case for a while, the US also posted strong gains. Small cap stocks performed well but strong corporate earnings and investor demand for anything AI pushed large cap tech stocks forwards, particularly Nvidia, Apple and Alphabet (Google) which all drove a strong return from the index. The returns in UK and European markets were still very strong but slightly lagged their US and Emerging Markets counterparts.
Bonds were mixed over the quarter, with US yields lower as rate cuts from the Fed finally started with the prospect of more to come. In the UK gilt yields rose with eyes firmly on the Budget in late November as the Chancellor grapples with increased borrowing costs.
Whatever the outcome of the Budget next month, it is unlikely to have much effect on the value of your investment portfolio. The UK is a small (c3%) part of global stock markets and any fall out is likely to be minimal. Of far more consequence to you will be any changes to tax or legislation. While we continue to be active on the planning front our message on investing will always be the same – be passive, buy the world and let the global financial markets do their thing.