AIM investors have had to get used to thinnest of gruel with three consecutive years of negative index price returns; at least Oliver Twist got an onion twice a week and half a roll on Sundays!
The AIM index saw a -5.7% price return in 2024, followed -8.2% in 2023, and -31.7% in 2022. Such a run has only been seen once before in AIM’s illustrious life, during the 2000-2022 period, with returns of -25.6% (2000); -37.6% (2001); and -32.9% (2002). The despondent investor may take some heart from what happened next: in 2003 AIM delivered a 38.6% return, backed up by a 20.4% return in 2004.
Given the complex, adaptive state of markets, the future will never be a facsimile of the past but, as the adage goes, ‘history often rhymes’. Therefore the portents may actually be positive despite, or perhaps because of, the last three years of lashings.
Without wishing to sound glib, with sentiment on the floor there is a tremendous amount of negativity now priced in. All it will take is for the future outturn to be less bad than expected to move the AIM market appreciably higher (it needn’t be great, but we’ll take that too). With signs of the economy slowing, we see the Bank of England having to cut rates more than expected which would be a major support to equity valuations as well as catalysing a potential cyclical upturn. When “the herd moves it moves”, and so too do prices.
