Filter out the noise and trust the plan

You may have seen recent comments from Bank of England Governor Andrew Bailey and JP Morgan CEO Jamie Dimon suggesting that the AI-driven stock market rally could be entering bubble territory and ready for a correction. While headlines like these can be unsettling, I want to reassure you: Lexington’s investment strategy is built for moments like this, because moments like this are nothing new.

Over the past 80 years, the stock market has delivered a negative return in roughly 3 out of every 10 years. The challenge is, no one knows in advance which year it will be, though many will try to predict it.

That’s why our approach includes a ‘liquidity pot’: money you plan to draw down and spend within the next five years is held in cash and short-term fixed income (typically via a Vanguard fund). This provides stability during market turbulence. The remainder of your portfolio is invested in equity funds holding some of the world’s leading companies, aligned with your risk profile. If your profile didn’t support full equity exposure, we’ve already balanced it with fixed income.

Market cycles and speculation are part of investing. History shows that trying to time the market often leads to missed opportunities, increased costs, and reduced returns. If you were to sell now, when would you re-enter? Often, it’s at a higher price.

As we saw during the financial crisis and the pandemic, governments and central banks tend to step in during periods of uncertainty, often through interest rate cuts or quantitative easing, to support markets.

So while Andrew and Jamie may be right, the markets will ultimately be right too. Even seasoned experts can be wrong. That’s why we focus on your long-term goals and financial wellbeing. Staying invested allows us to benefit from innovation and growth, while your liquidity buffer ensures flexibility and peace of mind.

As part of our annual review, we’ll be writing to you in December with recommendations to top up your cash reserves. In the meantime, if you have any questions or would like to discuss your portfolio, please don’t hesitate to reach out.