Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

OUR latest Investment Outlook is out, bringing together our most up-to-date thinking on where markets are now and where they might be headed next.

As always, there is much to chew over and that’s reflected in the many questions we’ve received from investors for the Outlook’s author, Tom Stevenson. Tom and I got through as many as we could in a video Q&A, which you can view here, as well as in the latest episode of the MoneyTalk podcast - subscribe now to join the growing ranks of listeners.

Your questions are always fascinating and the themes which emerge from them give an insight into what’s on the minds of ordinary investors right now.

Here’s what you’re asking us this time.

Will the war trigger a stock market slump - or worse?

The big (mostly downward) movements in share prices we’ve seen this year led many of you to ask whether now is the time to avoid investments. Some asked whether we could be headed for a stock market crash, while others expressed horror at the losses they’ve felt these past few months.

In response, Tom explained that he doesn’t hold that view - with the always-important caveat that no one knows for sure what will happen in the future. He pointed to still-strong earnings growth forecasts of around 10% in the US, as well as the fact that markets are trading on lower valuations than a year ago.

Moreover, investors were urged to put the current falls in perspective. The losses on the S&P 500 are around 8% from the peak. The FTSE 100, meanwhile, is around 1% higher over the same period. Returns in that range are painful but should not be a surprise for long-term investors, and they come after a three-year period of very strong gains.

Things aren’t easy at the moment but the stock market has shown resilience. Check out the graphic below to see how even historically large falls in markets tend to be recovered in time.

Have I missed the inflation trade?

Several questioners wanted to know whether it was too late to jump on assets that appear likely to win in a high-inflation environment. Commodities, in particular, were of interest along with gold and inflation-linked bonds.

This is always a hard question for investors - do you crystalise losses by selling assets that have fallen in value in order to buy something that might do better, but which is already expensive.

The unflashy answer was that big moves in and out of different assets are very hard to get right, and that keeping a well-diversified portfolio at all times is the best way to ensure you have a stake in a market before it does well. For those hoping to reallocate money now the watchword should be moderation. We don’t get to invest with hindsight, and you can soon get in a pattern of chasing your tail as you attempt to jump on the next big winner.

Is now an opportunity to buy tech at a discount?

Plenty of investors were determined to look on the bright side and asked whether now represented a good time to stock up on high-quality growth companies, and tech in particular.

The sector has been the biggest casualty of the recent falls - not really because of the war in Ukraine but more because rising interest rates and inflation erode their future earnings, which have been the basis of their high valuations for several years now.

Tom cautioned that the inflation story may have more painful chapters to come, and that growth companies will be vulnerable until prices and monetary policy begin to stabilise.

That said, it was also noted that the biggest tech names have been able to adapt and thrive in all sorts of conditions. Many enjoy strong pricing power which means they can raise their prices, and in turn their earnings, as inflation increases. What would it take for you to ditch your iPhone for a cheaper alternative, or to bin the Amazon subscription? Don’t be surprised to see forecast-busting earnings from elite tech companies.

Will interest rate rises crash house prices?

A few of you questioned whether the Bank of England was on the right track in raising interest rates as quickly as it is, and whether this could lead to property price falls.

Tom agreed that there is a question mark of the hawkish stance of the Bank, pointing out that much of the inflation we are seeing is beyond the control of central banks and will not be brought down by increasing borrowing costs. Should growth in the economy fall away - and it managed just 0.1% growth in February - then the Bank of England may have to rapidly change tack.

On the question of house prices, Tom shared the view that rate rises would put pressure on property, but that a big fall is still unlikely to materialise. While higher borrowing costs will take demand out of the property market (as buyers struggle to raise as much money) it’s also true that buyers have proven remarkably willing to stretch themselves and take on debt to get the property they want. A reason for that is that the jobs markets remains strong, and buyers feel secure in their employment.

A significant fall in property prices seems unlikely while that continues.

More on the latest Investment Outlook

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Tax treatment depends on individual circumstances and all tax rules may change in the future. Select 50 is not a personal recommendation to buy or sell a fund. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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