Marcus Padley, sums up the spirit of investing in equities and includes some interesting stats on expected returns

James Marlay

Livewire Markets

Marcus Padley, sums up the spirit of investing in equities and includes some interesting stats on expected returns. Notably, if you take the average of all 920 months of returns since 1937 - equities have delivered 5.77%. However, if you plot these returns next to each other there is no grouping around this average return figure. You get an almost linear progression of returns from plus 80 per cent to minus 45 per cent. There is no grouping of returns around 5.77 per cent, there is no tendency to small positive returns, there are just 920 red and blue bars stacked from highest to lowest with no gravitation towards 5.77 per cent at all. So what does this tell you? Once investors come to terms with the reality that returns are volatile they can focus on the exciting side of equities - like the individual Company stories. (VIEW LINK)


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James Marlay
Co Founder
Livewire Markets

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