Two articles, kindly supplied by Credit Suisse, dive deep into the returns generated by equities, bonds and cash over the last 108 years!
Preface by Kerr Neilson
With so much uncertainty and a gradual change in the economic order, it is always tempting to run up the flag of an original idea, without testing the view against a long sweep of time. This material, which contains some very concentrated data, depicted in charts, will probably surprise you. It may also steady your views should you be in a state of high emotion.
Remember over the long-term the principal drivers of your return from equities are the following:
- The initial dividend yield.
- The real growth of the dividend.
- The effect of inflation.
- The changes in the value placed on that income stream.
In the hurly burly of the markets, where capital values can move dramatically in a very short time, we like to believe that most of our gains come from capital appreciation. Empirically, this has been so…but by only a tiny margin. In fact the running dividend yield has typically been responsible for just shy of half of the long-term return from shares.
Read Possible Futures and Keeping Faith with Stocks.
DISCLAIMER: The above information is commentary only (i.e. our general thoughts). It is not intended to be, nor should it be construed as, investment advice. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Before making any investment decision you need to consider (with your financial adviser) your particular investment needs, objectives and circumstances. The above material may not be reproduced, in whole or in part, without the prior written consent of Platinum Investment Management Limited.
Building a Champion Team
Thinking like a Private Owner
Platinum Asset Management Supports Action to Remove Ushioda and Yamanashi from Lixil Board of Directors
Proposal to remove refundable franking credits can adversely impact LIC investors
Australasia’s Best Sporting Team
Earnings Yield As An Estimate For Expected Returns
Interview with Kerr Neilson
Cohesion Analytics: Winning starts at the Board