Thursday 9 October 2008

Doom And Gloom

Another disastrous day in the stock market, with the American markets again dropping precipitously to their lowest levels since 2003. Expect the FTSE to reflect this tomorrow when it opens.

With stock market returns over the past 80 years averaging 10.3%, and the markets this year down (so far) some 37% or so, it will take 5½ years just to recover to the point we were in December 2007.

This 10.3% figure is a little misleading however. The actual return in most years is seldom within 4% of that number.

For those of us like me who are not that many years away from retirement, the ongoing financial crisis is no doubt bringing about a major rethink of how best to position ourselves for this. I really do not want to have to work for an extra 5 years when I could be traveling the world.

Traditional wisdom has always been to salt money away in volatile stocks, and then as retirement approaches, transition over to safer investments.

With nothing seemingly very safe any more, there’s a strong argument going on in my head right now for giving up on financial investments and concentrating on sporting ones.

Whereas I have little control over the financial markets, I can at least control my sporting investments.

Not to mention that my returns for the past three years have been significantly higher than a measly 10.3%!

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