By: Egon von Greyerz
For most investors, there is only one asset class on the horizon. Whether it is the professional or private investor, when they consider investing, stocks will always be first on their list. And if we exclude all debt instruments, the stock market is by far the biggest market in the world. Global stock markets are capitalised at around $80 trillion currently.
Stocks – A Stairway to Heaven?
Since the creation of the Fed in 1913, investing has been “a stairway to heaven” (Led Zeppelin). But there have been quite a few stumbling blocks on the way. In 1929 the Dow peaked at almost 400 before the crash. The low of the Dow was in July 1932 at 40 – a 90% fall. It then took 25 years until 1954 for the Dow to get back to 400. This gives an average return of 5% over a 103-year period excluding dividends. This is an excellent return and including dividends the total return approaches 10% annually.
By: Egon von Greyerz
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