What The Industry Charts Don’t Tell You

17.02.2017 • The Economy

By Vern Gowdie – The Gowdie Letter (Australia) –

Share markets have long been considered the best asset class for wealth accumulation.

The world’s wealthiest person, Bill Gates, made his fortune from Microsoft shares. Warren Buffett also made his wealth from investing in shares. And the list goes on…Zuckerberg from Facebook, Ellison from Oracle, and Bezos from Amazon.

At face value, it appears to be an open and shut case for the wealth-creation powers of the stock market.

The investment industry adage is that in the long run shares always go up.

The following graph from Fidelity Investments is an oft-used example of the recuperative powers of the Australian (blue line) and global (red line) share markets.

Over the past 30 years (this seems like a reasonable period of time to test a theory), the market has shrugged off a number of setbacks: 1987 Black Monday, 2000 ‘tech wreck’, and Lehman Brothers in 2008. And the US market is on its way to higher highs.

What more evidence do you require?

How about a much longer-term picture of the US market?

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