Lamb Financial

01/09/2026

Market Crashes: A Normal Part of Investing

After looking at stretched stock-market valuations and rising pressures in global bond markets in our recent articles, it’s worth stepping back and remembering something fundamental: market crashes are not unusual. They are a standard, recurring feature of long-term investing. They happen for many different reasons, they happen more often than most people realise, and, crucially, they are almost always followed by recovery.

Although headlines often make crashes feel extraordinary, history shows they are part of the normal rhythm of markets. Over the decades, investors have lived through recessions, inflation spikes, banking crises, political shocks, pandemics, and periods of extreme optimism. Each episode caused markets to fall sharply. And yet, every single time, markets recovered and went on to reach new highs.

What causes market crashes?

Crashes rarely have a single cause. They tend to occur when several pressures build at once. These can include:

🔸 High valuations, where markets are priced for perfection and vulnerable to disappointment.
🔸 Economic shocks, such as recessions, inflation surprises, or sudden changes in interest rates.
🔸 Financial system stress, including problems in the banking or bond markets.
🔸 Loss of confidence, where investors react emotionally to uncertainty or negative news.
🔸 Policy mistakes, when governments or central banks intervene in ways that unsettle markets.
🔸 Speculative bubbles, where enthusiasm pushes prices far beyond underlying value.

Today, one area attracting attention is the rapid rise of AI-related companies and technologies. While artificial intelligence may transform industries over time, some analysts worry that expectations have become excessive and valuations unsustainably high. If optimism fades or earnings disappoint, the “AI boom” could deflate quickly adding another potential trigger to an already fragile market environment.

It’s not the fall that matters, it’s the recovery

When markets fall, the instinct is to focus on how far they drop. But for long-term investors, the more important question is how quickly they recover.

History makes this clear: the COVID-19 crash in 2020 saw markets fall sharply but recover within months. By contrast, the early-2000s downturn was far smaller in percentage terms but took years to repair. The second scenario is far more damaging to long-term wealth, lifestyle, and retirement plans.

This is why recovery time, not the size of the crash, is the real risk.

It’s also why we stress-test every client’s portfolio against a 30% market fall and a five-year recovery period. It allows us to assess resilience under realistic, historically grounded conditions.

If you’re concerned, let’s talk

If you’re worried about how a future market fall, or a potential AI bubble, might affect your lifestyle or long-term plans, please get in touch. A conversation now can provide clarity, reassurance, and confidence, whatever markets do next.

26/08/2026

Why Both Stock and Bond Markets Are Flashing Warning Signs ⚠️

In our previous article, we explored concerns about the stock market: historically high valuations, stretched pricing, and long‑term indicators, such as the Shiller CAPE ratio, suggesting that future returns may be lower than investors have grown used to.

We also suggested that while high valuations increase the risk of a correction, they do not tell us when one might occur. Markets can stay expensive for long periods, and although corrections often cluster around September and October, seasonality is a tendency rather than a prediction.

However, equities are only part of the picture: recent developments in the bond markets are equally troubling, and in some respects even more fundamental.

Government borrowing costs have been rising sharply. Yields on gilts have moved higher at the same time as the UK’s fiscal position has deteriorated. Normally, months such as January and July bring in strong tax revenues, yet this year even those months produced deficits. A major driver has been the surge in public‑sector pay and welfare spending, with benefit payments running at levels that now exceed the entire annual income tax take. When government expenditure rises while borrowing becomes more expensive, pressure builds quickly.

These stresses are not confined to the UK. In the United States, authorities have recently intervened in both the bond and currency markets, actions that typically occur only when policymakers fear deeper instability. Buying longer‑dated bonds to push down yields, or stepping in to support a weakening currency, may calm markets briefly, but they do not address the underlying issues of rising debt, sluggish growth, and widening fiscal gaps. History shows that when governments attempt short‑term fixes rather than long‑term solutions, financial strains often reappear in more disruptive ways.

Taken together, these factors create a challenging backdrop: expensive stock markets, stressed bond markets, volatile currencies, and governments struggling to balance their books. None of this guarantees an imminent crash, but it does mean that many of the conditions that precede major market falls are now visible.

At Lamb Financial, all our client’s portfolio have been stress‑tested against a severe market shock, a 30% fall in values followed by a five‑year recovery period. This ensures their financial plan is resilient even in difficult conditions.

If you are concerned about how a market fall might affect your lifestyle, income, or long‑term plans, please contact us.
A conversation now can provide clarity, reassurance, and confidence, whatever markets do next.

☎️01661 860 438
📩[email protected]

19/08/2026

Are Markets Due a Correction? What Today’s Valuations Really Mean for Investors

From time to time, headlines warn that a stock market correction may be “imminent”. Recently, much of this commentary has centred on a long term valuation measure called the Shiller Price/Earnings ratio, also known as the CAPE ratio. It’s a tool that compares today’s market prices with average company earnings over the past ten years, adjusted for inflation. Because it smooths out short term ups and downs, it provides a clearer view of whether markets are historically high or low.

Right now, this measure is at one of the highest levels ever recorded. In fact, it has only reached similar levels during the late 1990s, just before the dot com bubble burst. High readings like this suggest that markets are priced for strong future growth and optimism. They also indicate that long-term returns from shares may be lower than usual from today’s starting point.

However, it’s important to understand what this does not mean. A high Shiller ratio does not tell us that a market fall is about to happen. Markets can stay expensive for long periods, and they can continue rising even when valuation measures look stretched. The ratio is best thought of as a “temperature check” rather than a timing tool. It helps us understand the environment we’re investing in, but it cannot predict short term movements.

This brings us to another question clients often ask: “Is there a particular time of year when corrections tend to happen?” Historically, September has been the weakest month for stock markets, with the lowest average returns and the highest frequency of declines. October has a reputation for dramatic crashes; 1929, 1987 (I still remember it well!) and 2008 all happened in October, but its average return is actually positive. In other words, while September and October are often more volatile, seasonality is a tendency, not a forecast. Many Septembers rise, and many Octobers are calm.

So, what should long term investors take from all this?

First, today’s valuations suggest that future returns may be more modest. That’s not a reason to panic or make sudden changes. Instead, it reinforces the importance of staying diversified, investing according to their personal plan, and ensuring their portfolio matches their goals and their capacity for risk.

Second, volatility, whether it arrives in September, October, or any other month, is a normal part of investing. What matters is not predicting it but preparing for it which can reduce worry and stress when it’s all doom and gloom in the media..

That is exactly why every one of our clients has had their portfolio stress tested against a significant market shock. We model a scenario where markets fall by 30% and take five years to recover.

This allows us to assess the resilience of their plan, their income needs, and their long term objectives under challenging conditions. It ensures that their strategy is built not just for good markets, but for difficult ones too.

The results of these stress tests are built into their ongoing advice and their personalised financial plan. They help us make sure that their investments remain aligned with their goals, even if markets experience a correction.

Has your portfolio been stress tested?

If not, could be an ideal time to review your strategy and ensure it is robust enough to handle whatever the market delivers next.
If you would like to explore this further or discuss how today’s market environment relates to your plan, we’re here to help.

16/12/2025

Download our FREE Budget guide for everything you need to know about the impact of last month’s budget on your finances.

The 20-page publication covers all the key announcements by the Chancellor and the changes her budget brings in.

It includes sections on changes to tax and savings regulations, such as a freeze on income tax thresholds, modifications to salary sacrifice schemes, and a reduction in the Cash ISA allowance.

The guide also features an ‘at a glance’ summary of the key measures on tax, NI, and benefits and their impact on single people, couples, families, and pensioners.

Download your copy here
🔗 https://lambfinancial.co.uk/blog/download-your-free-guide-to-the-autumn-budget-statement-2025/

If you have any questions about how the Budget could impact your finances and would like some advice, contact us at [email protected] or call 01661 860438.

For everything you need to know about the impact of last month's budget on your finances, download our FREE Budget guide.

23/10/2025

Evidence-based investing (EBI) is a transformational approach that can empower you to make smarter, more confident investment decisions.

It shifts the focus from chasing potentially fleeting gains to building a stable, reliable investment strategy that aligns with your unique personal goals.

By understanding the science behind investing, you’ll be better equipped to achieve your ‘enough’ and enjoy your financial future with peace of mind.

Our latest blog 👇

https://lambfinancial.co.uk/blog/unlocking-financial-peace-how-evidence-based-investing-can-transform-your-wealth-strategy/

Unlocking financial peace: how evidence-based investing can transform your wealth strategy October 23, 2025 By David Lamb CFP™ MCSI Evidence-based investing (EBI) is a transformational approach that can empower you to make smarter, more confident investment decisions. Over the next few months, I.....

11/09/2025

The summer months have shown a complex and changing picture for global markets, with a key theme being the fragile balance between strong economic activity and ongoing geopolitical and fiscal tensions.

Download your FREE copy of our latest quarterly market commentary and our quick read summary via this link:

https://lambfinancial.co.uk/blog/quarterly-market-commentary-september-2025/

08/04/2025

After a day of global market turmoil yesterday, with hundreds of billions of pounds wiped off the value of the FTSE 100, our latest markets factsheet advises how maintaining a diversified portfolio and focusing on long-term goals can help cushion such short-term shocks. Download your copy here 👇

Long term view helps cushion short term market shocks April 8, 2025 After a day of global market turmoil yesterday, with hundreds of billions of pounds wiped off the value of the FTSE 100, our latest markets factsheet advises how maintaining a diversified portfolio and focusing on long-term goals ca...

16/11/2024

Last month’s budget has made changes to inheritance tax rules which will significantly affect how most pension funds are treated.

Read our latest blog to find out what you need to do now to protect your estate:

https://lambfinancial.co.uk/blog/why-you-need-to-act-now-on-pensions-and-inheritance-tax/

Why you need to act now on pensions and inheritance tax November 16, 2024 By David Lamb CFP™ MCSI Last month’s budget has made changes to inheritance tax (IHT) rules which will significantly affect how most pension funds are treated for IHT purposes. From April 2027, nearly all pension funds –...

01/11/2024

Download your FREE guide to the Autumn Budget Statement November 1, 2024 For everything you need to know about the impact of this week’s budget on your finances, download our FREE Budget guide. The 20-page publication covers all the key announcements by Rachel Reeves and the changes her budget bri...