Tuesday, March 17, 2009

Historical insight into stock price movements over a century

Credit Suisse Global Investment Returns Yearbook 2009 draws on 109 years of data for 17 countries that together represent some 90 per cent of world stock market value.

Elroy Dimson, Paul Marsh and Mike Staunton, writing in London Business School's latest issue of "London Voices" provide fascinating insights into some of the Yearbook’s highlights - demonstrating, for example, that: ""the 21st century already has the dubious honor of hosting two of the four worst bear markets in history" and that "over a single year, equities are so volatile that most of an investor's return comes from capital gains or losses, with dividends adding a relatively modest amount".

However, as one of the key influences on equity values is the growth of the real economy, and that is supposed to be influenced by liquidity on one hand and by interest raters on the other, it would have been fascinating to examine whether there is in fact any discernible long-term relationship between the worth of equities, bonds and cash on the one hand, and interest rates and money supply on the other. Sphere: Related Content

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