My Say No. 54 – Happy New Year!

It is that time of the year when one sighs with relief as the year end festivities subside and a semblance of normality returns. For me, the celebrations continue into the new year as both birthday (70th) and the long-awaited update of my favourite chart arrives.

The first picture remains pleasingly consistent as one would expect but this, as always, remains a function of the time span the chart now covers and the fact that it is only the income that is being displayed.

Return on Investment

In the second chart I have included the capital value and the picture becomes much more volatile. Dividend income is invisible to most people and thus is not newsworthy; it is the daily chatter about share prices that entertains the masses.
Select shorter time frames, and one can create pictures of the myriad financial disasters that become fodder for the media hounds.

This chart allows a walk down memory lane; the 1987 crash caused by speculation by the over geared ‘entrepreneurs’ of the 80’s. The 1994 financial market meltdown because of the sharp rise in global interest rates.
The 2002 dotcom boom and bust and, finally, the GFC caused by corrupt property speculation in the US that was exported to the rest of the world.

I am at pains to remind people that these ‘unforeseen crashes’ were merely the rational corrections following periods of the almost inevitable irrational behaviour that afflicts the human race. Nothing to be afraid of, simply to be endured.

With political uncertainty afflicting a number of countries it is understandable that people are nervous. All I can offer is the observation that at some unknown point in the future we will again have a ‘crash’ triggered by who knows what.
We will ‘get over it’ just as we have with all previous corrections allowing us to prepare for the next one. History remains my guide.

My first full day workshop for 2017 at Sydney University Centre for Continuing Education is scheduled for Saturday 25th February. Come along and have some fun.
Click on this link for details. / 

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