We Don’t Always Get What We Want
Good morning all,
I hope you are well and full of the bouncy optimism of summer.
I have been trying to allow some time for quiet reflection on this end. The business turned two years old at the start of July, so that was a nice jot in the sand. It’s been great fun since pretty much day one, but especially over the last year. I’m not entirely sure why that is, perhaps partially because it has been going well and I was quite nervous at the start (I resigned 6 weeks after our son was born. What score is that on an attitude to risk questionnaire?), or perhaps I’m simply one of those strange people who likes numbers and analysis.
On that point, and this next part is totally off the cuff (a properly structured newsletter would have this as a story in the main body of the email, but hey, sometimes we don’t always get what we want. Try telling that to a 3-year-old who wants Crunchy Nut cereal for breakfast/dinner. EVERY DAY. “Reynolds! Stick to the story”) but I was speaking to a lovely individual who was looking to retire at age 61. Currently aged 58, and with a good chunk saved in her pension, but no clarity whatsoever as to what was possible. She said she half-expected me to indicate that she wouldn’t be able to retire until age 65.
Anyway, after looking at things in detail I was able to show her that no, 65 was not on the table. Indeed, we could even chalk 61 off. Because even in a plan stuffed with stress-testing and modest investment returns, she was looking at a very healthy and fulfilling retirement from the age of 60.
It was also nice to mention that part of our ongoing discussions each year would revolve around encouraging her to spend more. That aspect of my work is very enjoyable. And it means I get to live vicariously through you nice people whilst I clean yoghurt off my kitchen wall.
See, it’s not all tax stuff and spreadsheets. The people part behind the numbers are the “funnest” part, as my son would say.
I can almost hear Microsoft Editor screaming at me as I type that word:
“That’s not a real word you buffoon! This is meant to be a professional communication!”
Indeed ‘tis, Mr Editor, but, as noted earlier, we don’t always get what we want.
Like the £20k ISA allowance to be left alone, for example. That is not the funnest (“aaarrrrggghhhh!” exclaims a distant automated voice) story I’ve read this month. No, indeed not.
Some genuine stability with the rules might be nice. Maybe to, you know, allow people to plan for the future with a degree of certainty. Crazy I know, but it just might work. Could we have some linking of the tax bands to inflation please, whilst we’re making a list? That would be nice. Maybe no changes to taxation rules midway through the year? Perhaps even (and I’m looking at you here, Holyrood) the removal of the 50% loss of earnings for Scottish taxpayers between £43,662 - £50,270 (because it is patently ridiculous and in no way progressive – total loss of earnings drops to 44% from £50,271 - £75,000).
But alas, we don’t always get what we want.
2025 Midyear Review - The Bumpy Road to New Highs
The halfway point of any year is a good time to pause, reflect, and learn from what we've experienced. As we've often reminded you, studying the lessons from market history is essential preparation for future challenges.
The first half of 2025 reminded us of the timeless patterns of investing. The more we can internalise these patterns, the more confidently we can say when the next crisis arrives: "It's never different this time."
What's Happened
The first half of 2025 demonstrated a return to normal market volatility. Following exceptional returns in 2023 and 2024, which were accompanied by unusually low volatility, markets reminded us that calm periods never last.
Adding to the generally positive backdrop at the start of the year, inflation (which had been a persistent concern over the last few years) started approaching target levels in most major economies. This removed one major source of uncertainty that had weighed on markets and investor sentiment.
However, geopolitical tensions continued to simmer, with new tensions between Israel and Iran adding to other ongoing conflicts. As history shows us, such geopolitical concerns are a constant feature of the investment landscape.
After reaching new highs in February, markets began to decline due to concerns about the valuations of technology companies. This decline accelerated on April 2nd, when President Trump announced sweeping tariff measures targeting virtually all trading partners. The market's response was swift and severe. Some markets fell more than 20% from their previous highs, officially entering bear market territory. If you felt unsettled watching the daily news during those weeks, you weren't alone.
Yet markets began recovering in late April as tariff policies were scaled back. Most global markets are now positive for the year, with many reaching new all-time highs. This is a remarkable turnaround, considering the negative sentiment just 10 weeks ago.
What We've Learned
What happened in 2025 was unique, but it reminded us of timeless investment truths. Three lessons stand out:
1. Markets often overreact to headlines.
The tariff announcement on "Liberation Day" sent markets into a tailspin, only for much of the policy to be scaled back within weeks. This reminded us that markets are composed of people, and people tend to react emotionally to alarming headlines. The initial panic, followed by swift recovery, showed how sentiment can swing wildly while the underlying fundamentals remain largely unchanged.
2. Market timing remains impossible.
The first half of 2025 demonstrated once again that the only way to earn the market's full return has been to remain invested at all times. During the depths of the decline, many experts predicted further falls and advised caution. Yet the recovery began precisely when fear was at its peak.
Did you feel tempted to make portfolio changes during those uncertain weeks? Those who tried to avoid the volatility not only locked in losses but also missed the subsequent recovery.
3. Volatility is a normal part of the investment journey. Make it your friend, not foe.
The correction, followed by a strong recovery, reminded us that volatility isn't a bug in the system; it's a feature. These temporary declines are precisely what allow long-term investors to earn superior returns. Instead of fearing volatility, mature investors understand it's the price of admission for owning the great companies of the world.
Looking Ahead
As we enter the second half of 2025, we anticipate new challenges ahead. History shows us that the future remains a chain of constant surprises, and we expect this pattern to continue.
The volatility of the first half reminds us that market corrections occur roughly once a year, and investors should not be surprised when markets do what they have always done.
Whether it's trade tensions, geopolitical problems, or something completely unexpected, we will face them with the same core beliefs that guided us through the first half: patience, discipline, and focus on the long term. Remember, lifetime investment success comes from acting continuously on your plan, not from reacting to current events.
We understand that staying disciplined during volatile periods can be challenging. However, it's a privilege to support you through these unavoidable challenges, knowing that every cycle you navigate successfully brings you closer to your long-term financial objectives.
Words from the wise
Some timeless wisdom from the greats:
Optimism Prism
The media is not a friend of the disciplined and patient investor. Ignoring the key determinants of lifetime investor returns, the media focuses on short-term returns, market predictions, and negative news.
We present the following as an antidote to the onslaught of negative news:
Recommendations
A “kind of” repeat recommendation with a new episode. I really enjoyed this recant of the life and works of Arthur Conan Doyle, son of Edinburgh and the author of Sherlock Holmes.
If you’re a whisky drinker, you might enjoy this. The Lochranza distillery on Arran is probably my favourite, and I’ll be toasting the company’s 2nd birthday this weekend (and also my own, incidentally).
That’s us for this month!
All the best,
Andy
• This newsletter is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.
• Past performance is used as a guide only; it is no guarantee of future performance.
• Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
• The value of investments and any income from them can fall as well as rise. You may not get back the full amount invested.
Levels and bases of, and reliefs from, taxation are subject to change and their value will depend upon personal circumstances. Taxation and pension legislation may change in the future.
