Over the longer term, investors expect a positive after inflation return from investing in company shares and from lending money to governments and companies by owning bonds. Unfortunately, and inescapably, in the shorter term, market returns are anything but predictable. They contain a lot of ‘noise’ as the market absorbs new information into prices. High inflation in 2022 led to a rapid rise in interest rates around the world, contributing, in part, to the fall in global bond and equity prices. It was a painful backward step and a reminder that the road to long-term returns can be bumpy and painful at times. With these now higher yields, some investors may have been tempted to hold more cash but roll forward a year and that would have been a poor decision in the short term. It is also nearly always a bad decision in the long term for those with long investment horizons. Fortunately, 2023 has delivered a much more positive story. Download here.