Looking back over the somewhat sporadic 12 years of this blog, there are several recurring themes. One is disappointment with the latest performances of my football team. Another is dislike of insurance companies, and especially their treatment of their existing customers. But a third – and perhaps the most frequent – is steadily-increasing scepticism about the returns to be made from equity investment.
The fact is, if I’d started the blog earlier, the scepticism would have reached even greater heights by now. As it was, the earliest posts coincided with the second half of the 2007/2008 market crash. But I missed the first half – and of course I completely missed the biggie, the 2000/2003 slump that saw the FT-SE100 fall from just about 6,500 to 4,000 over three years.
Looking beyond these disturbingly frequent individual setbacks and taking the long view, today the index, at a little under 5,000, is just about exactly where it was 22 years ago, in autumn 1997, back in the first few heady months of Tony Blair’s first term.
I know the counter-arguments – primarily that stock market investment is all about dividends and you should think of capital growth as an unpredictable and unreliable bonus, and also that given the ups and downs of those 22 years people who got their timing right could have made a fortune despite the absence of long-term growth. But there are of course counter-arguments to the counter-arguments: get the timing wrong, which most of us do, and you could have lost a fortune despite the absence of long-term decline. And if you got your timing really badly wrong, you could probably still be showing a loss even taking your divvis into account.
All this seems a long way away from the sort of expectations that formed in my mind during my early years in this business. For some reason I remember ads for the Foreign & Colonial Investment Trust which must have been running in the 80s, showing the kinds of returns you could have made if you had invested way back in 1948. This was, admittedly, an inconceivably long time ago, but as I recall I think they showed that over that 30-odd year period you would have turned £1000 into a million. Over the last 20-odd years, you’d be lucky to get your £1000 back.
I’m no economist, but even I can see that every few years the same thing happens. Just when you were starting to think that yes, maybe this is the smart thing to do to ensure my long-term financial security, bang, there we go again and all those £s you put away turn into 60 or 70 pences.
I’m not sure what the alternative might look like – we’re all so steeped in the stock market myth that none of us has even bothered to think about it But judging by the recurring theme of this blog over 12 years, it’s getting to be about time we did.