Time to Consider a World without Shares

23.06.2016 • Politics and War

From Gowdie Family Wealth (Australia)-

Winning by not losing.

Secular bear markets are rollercoaster rides. They are not for the fainthearted.

The problem is, most people are ignorant of the dynamics of a Secular Bear market, so they have next to no appreciation of the volatility they are paying for.

The greatest Secular Bull market in history (running from 1982–2000 in the US, and 1982–2007 in Australia) saw shares appreciate more than 1,500% in value. The greatest credit boom in history was instrumental in aiding and abetting the share markets’ stellar rise.

Unfortunately, the extent of the Secular Bull market — in both duration and return — created unrealistic investor expectations. The investment industry has continued to trade very heavily off the spectacular success of the Secular Bull market, to convince investors the share market still has the power to deliver superior long term performance. The alluring mystique of the market is, in my opinion, on the cusp of being shattered to the extent that a generation or two may never again fully trust shares as an investment class.

I appreciate that’s a pretty bold statement, given the market’s resilience since 2009.

However, when you analyse the performance of the Australian share market over the past seven years it has, for the most part, been heavy going.

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