Have Shares Lost Their Appeal For Long Term Investors? – Oliver’s Insights

After several years of poor returns from shares, investors are undoubtedly questioning the prospect of future returns from growth assets. This note looks at whether the “stocks for the long term” approach is still valid for investors with a long term investment horizon.

Key points to note are as follows:

  • While rolling 10-year periods occasionally see returns from Australian shares fall short of bonds and cash, this is rarely the case over 20-year periods, and has never been the case over 40-year periods.
  • The high returns from cash and bonds over the past 30 years or so won’t be repeated as starting point yields are now much lower than was the case in the 1980s.
  • The current period of poor returns from shares is not particularly unusual – investor sentiment is doing what it normally does after an extended bear market in shares. It is dangerous to conclude “this time it’s different” and that shares will no longer provide a higher long term return. 


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