If you have checked your portfolio recently, you could be forgiven for wondering whether something has gone badly wrong. I even jumped to conclusion myself, having received an extraordinary amount of concerned messages from subscribers and social media followers.

Stocks have been falling. Bitcoin has dropped sharply. Bond markets are under pressure. Oil has surged. And just as investors were beginning to believe the inflation problem was largely behind us, interest rates are suddenly back at the centre of the conversation. It feels like everything is going downhill at once, and fast.

But there is something important to point out…

These aren’t necessarily separate problems. Much of what we are seeing comes back to the same thing: inflation and the price of money as a result of global events.

The latest US inflation figures showed headline CPI running at 3.4%, with prices rising 0.4% in August alone. Petrol was responsible for more than a third of that monthly increase.

That matters because oil prices have climbed back above $100 a barrel as geopolitical tensions disrupt energy markets. Higher energy costs eventually work their way through almost everything — transport, manufacturing, food, utilities and ultimately consumer prices.

We are seeing the same problem closer to home. UK inflation currently stands at 2.9%, above the Bank of England’s 2% target, while the Bank has warned that higher energy costs could push inflation higher again during the second half of 2026. Bank Rate remains at 3.75% ahead of its next decision on 17 September.

The problem for markets is simple.

If inflation stays higher for longer, interest rates may also need to stay higher for longer.

Markets spent much of the past few years looking forward to cheaper money and now that assumption is now being questioned.

The US 10-year Treasury yield has pushed above 5%, its highest level in almost two decades, while markets are preparing for another Federal Reserve interest-rate decision.

Higher bond yields create competition for stocks.

If investors can earn around 5% from government debt, they naturally demand a higher potential return before taking the additional risk of owning equities. At the same time, companies face higher borrowing costs and future profits become less valuable when they are discounted at higher interest rates.

Expensive growth stocks (MAG 7 etc) are particularly sensitive to this. That doesn’t mean that companies suddenly stopped making money.

It means investors are reassessing what they are prepared to pay for those profits.

Bitcoin has not escaped the sell-off.

It fell around 4% on Tuesday to roughly $76,000 after the US Senate failed to advance major cryptocurrency legislation.

But there is a broader factor to consider.

Despite often being described as “digital gold”, Bitcoin still behaves like a risk asset when financial conditions tighten. When bond yields rise, the dollar strengthens and investors become more defensive, highly volatile assets can get hit hardest.

Bitcoin can therefore fall for many of the same reasons that growth stocks fall — and then amplify the move.

That volatility is part of owning it.

There are risks worth watching.

Oil staying above $100 for a prolonged period would make the inflation battle considerably harder. Persistent inflation could force central banks to maintain restrictive monetary policy. And rising government borrowing costs are adding another layer of uncertainty. But there is an equally important counterpoint.

The global economy has not suddenly stopped functioning.

US corporate earnings remain relatively resilient and, despite the recent selling, the S&P 500 is still not far from the record levels reached in August.

Markets are now repricing uncertainty; they are not currently pricing in the end of capitalism or suggesting a huge crash is imminent.

Nothing particularly exciting, I’m continuing to invest.

Periods like this are uncomfortable because falling prices make us feel as though we should do something. But long-term investing has never been about avoiding every correction, rate scare or bout of geopolitical uncertainty.

Those periods are part of the return.

If you are accumulating investments over decades, lower prices are not automatically bad news. The same monthly contribution simply buys more shares. Nobody knows whether markets rebound next week or fall another 10%.

I certainly don’t.

But my strategy was never built around predicting next week. It was built around owning productive assets, remaining diversified, consistently adding money and giving compounding enough time to do its job.

Right now, markets are reminding us why that last part can sometimes be the hardest.

Be Patient. Continue Investing. Focus on your long term goals.

The Compounder
Long-term investing made simple.

The Compounder is for financial education and commentary only. I am not authorised or regulated by the Financial Conduct Authority and I do not provide financial advice, investment advice, or personal recommendations. Nothing published here should be taken as a recommendation to buy, sell, hold or switch any investment, fund, pension, ISA, crypto asset or financial product. Always do your own research and consider speaking to an FCA-authorised financial adviser if you are unsure.