For investors, much depends on when you put your money in
IT IS all too easy, given today’s 24-hour news cycle, to become obsessed with short-term movements in financial markets. But investors must learn to focus on the long term.
The final return of an equity investor is highly dependent on when he starts to put money in. In real (inflation-adjusted) terms, British equity prices reached peaks in 1906, 1936, 1968 and 1999, according to the Barclays Capital Equity-Gilt study. The regularity of the intervals between these summits is remarkable and will undoubtedly encourage believers in “long wave” theories (Wall Street’s peaks, in real terms, occurred in 1928, 1968 and 1999). The patterns suggest that each generation discovers a passion for equity investment that is followed by disappointment. ...