With memories of 2008 and talk of a lost decade, many investors have questioned their views on long term investing. But earlier generations of investors faced similar worries – and today’s headlines echo the past with stories about government spending, inflation, oil prices, economic stagnation and high unemployment. And as this information aims to show, those investors who were patient prevailed in difficult times.
While not attempting to predict the future, history has had an interesting habit of repeating itself.
We reflect on the Australian Share market which has just endured two consecutive years of negative performance, and note that it has never experienced three consecutive years of negative returns in the last 100 years. Only 4 times in history has the Australian Share Market had negative returns in two consecutive years.
We now highlight those times, and in particular draw attention to the year following those two consecutive years of negative returns.
1929 -3.6%
1930 -28.1%
1931 +20.0%
1951 -3.3%
1952 -11.8%
1953 +14.8%
1973 -23.3%
1974 -26.9%
1975 +62.9%
1981 -12.9%
1982 -13.9%
1983 +66.8%
Information courtesy of AXA Australia – sourced from the All Ordinaries Accumulation Index
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Note: Advice contained in this articler is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser. While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding. The information provided is current as at January 2012.