Apparently investors have lost interest and as the world stagnates they’ll lower their expectations and turn their attention to fixed interest and cash.
Now that’s a fine strategy if it fits your goals and expectations, because fixed interest, real estate investment trusts and cash are all still important components of an investment portfolio.
However, a little digging will show it’s not the first time shares have had their last rites administered before coming back to life.
Back in August 1979, BusinessWeek dedicated its cover story to “The Death of Equities”, with some interesting lines.
My favourite, in particular, “today, the old attitude of buying solid stocks as a cornerstone for one’s life savings and retirement has simply disappeared.”
The reason it’s my favourite is because of what shares did since their supposed death on August 13 1979.
Had you invested $10,000 into the ASX All Ordinaries Accumulation Index, which factors in reinvested dividends, by August 1980 it would have been worth $17,930.
Five years later in August 1984, that $10,000 would have grown to $31,913.
Ten years on and even factoring in a share market crash in 1987, that $10,000 had grown to $70,470.
Twenty years on and by August 1999 it had grown to $178,678.
By thirty years, even with the dotcom bubble and the latest financial crisis, that initial $10,000 had turned into $405,539.
As it stands today, that initial investment has grown to be worth over $450,000.
Now it’s not to suggest this is about to be replicated over the next thirty years, but it does illustrate the returns that were available over three very eventful decades.
War, tsunami, earthquake, nuclear disaster, terrorism and multiple financial meltdowns have all sent shockwaves through financial markets over the past thirty years.
The challenge for investors against such a backdrop of turmoil is achieving those available returns when so very few ever capture them.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. Need help with your financial your financial future, we think we’re the best financial adviser in Australia.
