Change is coming – but your investment approach should stay the same

High inflation, extreme market volatility, populations at loggerheads. Things are changing fast, says Merryn Somerset Webb. But for investors, the usual rules apply: look for long-term resilience at a reasonable price

Woman with a crystal ball
An average outcome is also the least likely
(Image credit: © Getty Images/iStockphoto)

It’s forecasting season. The MoneyWeek inboxes are fast filling up with everyone’s views for 2022. This is, of course, mainly for entertainment and attention-grabbing purposes. As John Authers notes on Bloomberg, in the long term you can be pretty sure that stockmarkets will track economic growth. In the shorter-term, however, you can be sure of nothing.

Average market returns knock around 6%-8% a year. But in a single year you hardly ever get the average: the most common result is between 10% and 30% – and a loss of 20% is more likely than a 0%-10% gain. Yet most analysts opt for end-of-2022 targets about 8% above wherever the S&P 500 is when they write the forecast. That probably feels safe – but judging by history, almost certainly wrong. It might be better for analysts to skip the faux precision and simply bet on “up a lot” or “down a lot” – on something extreme rather than something average happening.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.