It’s not all butterflies and roses in equities. The market, by most reckonings right now, is expensive. That’s not to say that there isn’t value out there. There is. In fact, we’ve seen returns on some investments are returning upwards of 40% over the last twelve months.
In the words of legendary investor Peter Lynch, who averaged a 29.2% annual return between 1977 and 1990 while the manager of the Magellan Fund at Fidelity, “You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.”
For those of you who don’t remember entrepreneur, investor and environmental champion Sir James Goldsmith, he drove some of the most successful corporate takeover bids of the 1980s. But it was his investment savvy, just weeks prior to Black Monday, that has sparked today’s thoughts.
Apparently the investor herd has grown wary of its own growing stock market confidence. That’s despite the $£multi-trillion cash mountain that remains on deposit and earning nothing in the midst of this lowest of all possible interest rate environments. And while market sentiment might be turning a bit, there’s little by way of evidence to suggest that big cash pile will be doing the same anytime soon.