Tuesday, February 19, 2013

The problems of long-run data results and medium-term living

I like to talk about the efficacy of having equity in the portfolio because that is an asset class, I have been led to believe, which gives an inflation-plus return. But equity’s image as a super asset class beating the stuffing out of inflation has been under attack for a long time, specially so since 2008. Then last week a colleague sent across some disturbing news. The Economist has a story (http://econ.st/VqMcNA) which says that global bonds have outperformed equities since the start of the 1980s. The story is based on a book, “Triumph of the Optimists: 101 Years of Global Investment Returns,” written by London Business School professors Elroy Dimson, Paul Marsh and Mike Staunton. The colleague’s unasked question: “But you said…”
My column in Mint

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