David Prosser: Investment history rewritten?
Wednesday 23 December 2009
Outlook: Successive generations of Britons have grown up accustomed to received wisdom about investing: that while share prices can both rise and fall, over time equities tend to rise – and to outperform other asset classes. Well, as the feature on page 34 explores, that has certainly not been the case during the first decade of the 21st century.
Where does that leave financial planners, who have routinely advised savers to turn to the stock market when working towards long-term goals such as repaying a mortgage, funding a pension or putting a nest egg aside for the kids?
The short answer is that for genuinely long-term projects, the stock market should remain the asset class of choice for most people. Figures from Barclays Capital show that over the past 100 years, shares have outperformed cash in 93 per cent of 10-year periods and beaten bonds 83 per cent of the time. In that sense, the last decade has been a blip.
That, however, is a little glib. As every investment advert reminds us, past performance is no guide to the future. Even if it was, with people's faith in equities having been shaken more dramatically than at any time in living memory, we need more than statistics to comfort us.
Try Warren Buffett for size. There are so many witticisms to choose from, but one thing the Sage of Omaha once said rings especially true today. "If you're an investor, you're looking on what the asset is going to do," he said. "If you're a speculator, you're focusing on what the price of the object is going to do, and that's not our game."
Nor should it be the game of long-term savers. The value of companies that are well run and offer good products and services will eventually rise again.
- 1 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Ball pool for adults opens in London
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 5 Rashida Jones speaks out against male-centric porn saying 'women should have sex and feel good about it'
Boris Johnson claims porn-obsessed Islamic jihadists are 'literally w*****s'
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Putin opponent reveals Russian President's daughter's secret identity
Ball pool for adults opens in London
Gay couple buy JebBushForPresident.com web domain, and refuse to sell
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...