Market stress: Should I be worried?

With unpredictable US government policy making for a volatile investment environment, US equities’ searing post-Liberation Day progress appears to have stalled, while gold market fever could be a symptom of stress in global capital markets. But history suggests that equities tend to reward the patient.

21 January 2026

Doctors get asked this all the time by anxious patients who, having described their symptoms, really don’t care about the technicalities and simply want to know what their emotional state ought to be. It’s a human enough response when we are not feeling 100% and just need answers.

The politics, culture, macroeconomy and markets today are also presenting symptoms, this time for concerned investors. The S&P 500’s remarkable ascent appears to have stalled while gold is on a tear, telling us that all is not well with the complex system that is capital markets. The US administration this year alone has removed Venezuela’s President, threatened Iran, Canada and also Greenland while openly describing a key ally’s actions as “stupid”. Meanwhile, Japan has just seen its long-term bond yields spike as the Prime Minister promised direct food subsidies with no obvious plan of how to fund them.

Keep calm and carry on

It is of course incredibly easy to give in to anxiety and feel that risk assets like equities are just not a good place to be after all. And a few less experienced professional advisors may be equally tempted to sound the alarm and thereby project an appealing, sensible aura during a difficult time. But what’s really important here is not so much predicting exactly what will happen next to stockmarkets and trading around it - such strategies have a dubious track record - but instead to think about how robust a client’s suitability assessment is and whether the chosen investment portfolio is truly ready for anything given an investor’s ability to stomach volatility. It’s never a bad time to reassess suitability but, just as a sombrero can suddenly look like a bad idea when you arrive back at the airport, doing it right in the middle of a bout of volatility is probably not optimal.

Lessons from history

In the meantime, it’s worth considering NYU Finance Professor Aswath Damodaran’s* updated long-term asset class returns from 1928 to 2025 which reveal in stark detail what investors have been able to achieve across different asset classes over the long term. While past performance is no guide to the future, intuitively it makes sense that equities have outperformed - and will potentially continue to do so over time - given that corporate earnings and economic growth are major drivers of equity prices. Those investors who have been prepared to make the commitment to equities and stick to it – whether through a cautious or an aggressive portfolio – have tended to be rewarded.

Real compound return USD, % from 31 Dec 1927 to 31 Dec 2025