Ends crisis begins to boom, the stock market is still very low and thanks to attractive levels. So I think it is worth, therefore, to write something more about the profitability of investing in stocks, bonds and deposits. Begin a new cycle, now part of the first.
In the literature of investing there is a compelling and well established view according to which investing in stocks compared to any other ways to multiply capital in the long run gives the highest return possible. Now, after the stock market crash of the fall of 2008 and well after a very heavy bearish throughout the year 2008 there was a trend for a specific stock market pessimism.
Therefore, it appeared even the thesis claiming that long-term investing in stocks is not as profitable as it is taught in previous years, the proceeds of a lot safer bonds and investment is even greater in the long term. Of course, very easy to preach such statements now on the battlefield bear market, when, despite some improvements in this year's stock indexes are still crawling around in their lower levels, while still very far from its all time peak, and the price of individual stocks are much lower, often still in the area of \u200b\u200btheir historical minima sometimes even more deeply, or at least close to the bottom. In this setting the historical rate of return on stock markets melted a bit, even in long-term perspective and comparing them to rates of return of the so-called. safe assets, or deposits or bonds, they got some arguments to hand in the form of more favorable for themselves numbers. Of course, nobody also preached about the advantages of bonds and deposits of shares in the stock market boom during the late 2007, when the market indexes rose almost to the very heavens. Then such arguments were considered very unfashionable and even silly. This will happen again when the markets will experience back to their old levels. But for those arguments because they are fashionable in times of crisis in general became fashionable pessimism and political correctnes required to surpass the catastrophic visions - even if what you have "the sock" not killed yet the stock exchange, is yourself and so you will be killed by swine flu.
As I wrote, thesis about the advantages of investments in shares and bonds over in this very unstable time of momentary human history trendy, this does not mean at all that are thus justified. Even now, when the markets are still crawling heavily wounded bear market in 2008, historical rates of return are still arguments in their favor rather than in favor of the bond markets and investments. Let them speak facts and figures. First
us treat markets as a monolithic whole. Peter Lynch in his book Fri Beat the Stock Exchange (Warsaw 2009) compiled some very interesting data (p. 26) in the wake of the vintage SBBI Ibbotson Yearbook 1993. Year This compares historical rates of return is the stock markets, bonds and Treasury bills in decade intervals from 1920 to 1990. From the table in the book, Lynch shows that in only one decade of the 30s Great Depression stock market represented by the venerable S & P500 index was worse than the bond market and Treasury bills. This should not surprise anyone, after all, sometimes years 1929-1932 were the biggest stock market crash in history. To illustrate the scale of the tragedy of the situation enough to mention that the Dow Jones Industrial (hereinafter abbreviated to DJIA) fell at this time with 381 points to just 41 points. In the remaining decades always win the market share of the market, treasury bills and bonds with the exception of the decade of the 70's, when it was more or less a draw. This period is called the time. oil crisis, and of course the accompanying another slump in the stock market. At the outset, there is imposed a proposal that even when the stock market slump and the global economic crisis is the stock market can not lose market debt securities, while the latter, and it is not able to beat him (only exception is a period of 30 years -these, the greatest economic crisis in the history of capitalism).
I'm not going to quote the exact numbers for each specific decades from the table survives for posterity by Lynch, I make only one averaging rates of return. Here's how it falls for the years 1926-1990: market share (11.3%), the bond market (4.9%), the market for Treasury bills (3.6%). As you can see the stock market is beating the market by a head of treasury bonds and bills in the long term (note, this is obviously not averaging an annual average rate of return on these assets from 1926 to 1990).
CDN
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