Are Markets Too Calm or Are Investors Finally Looking Through the Noise?
- Adon Beddoes
- Apr 27
- 7 min read
Global markets have had a strange few months.
On one hand, investors have had plenty to worry about. The Iran conflict, higher oil prices, concerns around artificial intelligence valuations and renewed questions over private credit have all created a fairly uncomfortable backdrop.
On the other hand, markets have not exactly behaved as if the world is ending.
In fact, many major stock markets have remained resilient, with investors still focused on corporate earnings, interest rate expectations and the long-term growth story around technology and artificial intelligence. JP Morgan Asset Management recently noted that investors are still benefiting from solid earnings, resilient demand and continued investment in technology and AI, although elevated valuations mean risk needs to be managed carefully.
So, are we on the brink of a stock market crash?
Probably not the right question. The better question is whether investors are being properly rewarded for the risks they are taking.
Why markets have kept rising
The main reason markets have stayed strong is earnings.
Despite all the noise around geopolitics, tariffs, inflation and interest rates, many large companies have continued to make money. In particular, the big US technology names have continued to dominate global equity markets.
The AI theme remains powerful. JP Morgan has highlighted that AI investment is still driving significant capital spending, although they also warn that the theme is becoming more volatile and that not every company will be a winner.
That last point matters.
AI may well be transformative but markets are already pricing in a lot of future success. When valuations are high, companies do not just need to perform well. They need to perform extremely well and that is where the risk sits.
If you’re an expat looking for more clarity around your investments, pensions or cross-border planning, get in touch and one of our advisers will be in contact.
The private credit concern
Away from public stock markets, private credit has become one of the areas attracting more attention.
Private credit is essentially lending outside the traditional banking system. It has grown significantly over the past two decades, partly because investors have been attracted by higher yields and partly because companies have looked for funding outside normal bank lending.
The worry is not that all private credit is bad. It is that the sector has grown very quickly, is less transparent than public markets, and can be harder to exit during periods of stress.
JP Morgan’s latest view is fairly balanced. Their data shows private credit default rates are around 2%, broadly in line with recent years and similar to high-yield bonds. They also note that private credit continues to offer returns above public high-yield bonds.
Evelyn Partners has also argued that private credit risks are probably not systemic, although they acknowledge that the sector is under greater scrutiny.
In simple English, this does not look like 2008 all over again. But it is a reminder that higher returns usually come with less obvious risks attached. Sometimes the risk is not whether you get paid. It is whether you can get your money back when you actually want it.
What about valuations?
This is where investors need to stay sensible.
Vanguard’s latest forecasts suggest that although the outlook for global stock and bond markets has improved slightly, US equity valuations remain significantly above long-term fair value.
That does not mean markets must crash tomorrow.
It does mean future returns may be more modest from current levels, especially if earnings disappoint or interest rates stay higher for longer.
Vanguard has also said that while US technology stocks may continue to perform well, risks are growing and more attractive opportunities are appearing outside the most expensive areas of the market.
That is not a reason to panic. It is a reason to diversify.
The Middle East and oil risk
The Iran conflict has added another layer of uncertainty.
The biggest investment impact from Middle East tension is usually energy. If oil prices rise sharply, inflation pressure can return, central banks may become more cautious and consumers may have less money to spend elsewhere.
Evelyn Partners has described this as a potential “warflation” risk, where conflict pushes energy prices higher and makes the inflation picture more complicated.
For expats, this can feed through in a few practical ways.
Higher energy prices can affect travel costs, business costs and inflation in the country where you live. Currency movements can also become sharper, especially if investors move into the US dollar during periods of stress.
This is why internationally mobile investors need to think beyond just “is my portfolio up or down?”
Currency, timing and cash needs matter.
So, should investors be worried?
A bit of worry is healthy. Panic is not.
Markets can fall. They always could. The uncomfortable truth is that nobody rings a bell at the top and nobody sends you a polite calendar invite before the next correction.
But trying to jump in and out of markets based on headlines is incredibly difficult. Often, the best days in markets come close to the worst days. Miss those recoveries and long-term returns can suffer badly.
For most investors, the answer is not to abandon equities. It is to make sure the portfolio still matches the plan.
That means checking:
Your risk level still feels right
You have enough cash for short-term needs
You are not overexposed to one theme, region or currency
Your portfolio is diversified across asset classes
You understand what you own and why you own it
What should expat investors do now?
For expats, this is a good time to review the basics.
If you need money in the next 6 to 24 months, it should probably not be fully exposed to equity markets. Cash, money market funds and short-duration fixed income can play an important role.
If you are investing for 10 years or more, volatility is part of the journey. The key is not avoiding every market fall. The key is being positioned so you do not have to sell at the wrong time.
This is especially important if your income, spending and future goals are spread across different currencies.
A UK pension, US dollar investment account, Philippine peso living costs and future property purchase in Europe all create different risks. A portfolio that looks good on paper may still be badly matched to your real life.
That is where planning matters.
Final thought
There are genuine risks in markets today.
AI valuations are high. Private credit deserves scrutiny. The Iran conflict could still affect energy prices. Interest rates may stay higher than investors would like.
But none of this means investors should automatically head for the exit. Good investing is not about reacting to every scary headline. It is about building a portfolio that can survive them.
The best investors are not the ones who never feel nervous. They are the ones who have a plan before the nerves arrive.
If you would like a clear, structured view of how your portfolio is positioned in today’s market, we can help you sense-check your strategy and ensure it aligns with your long-term goals.
FAQ's
Are we heading for a stock market crash?
There is no clear evidence of an imminent crash. Markets are elevated and risks exist but strong corporate earnings and continued investment trends are still supporting valuations. Corrections are always possible, but timing them is extremely difficult.
Why are markets rising despite geopolitical tensions?
Markets tend to focus more on earnings, interest rates and liquidity than headlines. While conflicts like Iran create short-term volatility, investors are still pricing in long-term growth, particularly from technology and AI.
What is private credit and why is it a concern?
Private credit refers to lending outside traditional banks. It has grown rapidly due to higher yields but it is less transparent and often less liquid. The main risk is not necessarily default, but the ability to access your money during stressed periods.
Should I reduce my exposure to equities now?
Not necessarily. It depends on your time horizon and financial goals. If you are investing long term, staying invested is usually more important than trying to time the market. However, if you need cash in the short term, reducing risk may make sense.
How does the Iran conflict impact my investments?
The biggest impact is through oil prices and inflation. Higher energy costs can affect global growth, interest rates and currency movements, which in turn influence investment returns.
Are AI stocks in a bubble?
Some valuations are stretched, and expectations are high. While AI has strong long-term potential, not all companies will succeed. This increases the risk of volatility, particularly if earnings fail to meet expectations.
Is diversification still important in today’s market?
More than ever. With risks spread across geopolitics, valuations and different asset classes, having a diversified portfolio helps reduce reliance on any single market or theme.
What should expats specifically be thinking about right now?
Currency exposure, cross-border tax implications and access to liquidity are key. Many expats have assets and liabilities in different currencies, which adds another layer of risk that needs to be managed carefully.
What is the biggest mistake investors make in times like this?
Reacting emotionally. Selling during uncertainty and buying back later often leads to worse outcomes. Having a structured plan and sticking to it is usually the better approach.
When should I review my portfolio?
At least annually or whenever there is a significant life change. Periods of heightened uncertainty, like now, are also a good time to check whether your portfolio still aligns with your goals and risk tolerance.
Disclaimer
This article is for information purposes only and does not constitute financial, investment, tax or legal advice. Nothing contained herein should be relied upon as a recommendation, offer or solicitation to buy or sell any investment or to adopt any investment strategy. The views expressed are based on information available at the time of writing and may change without notice.
The value of investments and the income from them can fall as well as rise and you may not get back the amount originally invested. Past performance is not a reliable indicator of future results. You should seek regulated financial advice specific to your individual circumstances before making any financial decision.
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