The main\u00a0conclusions is that the majority of shares do not perform nearly as well as government bonds. It is an exceptional\u00a0few that make it look as though shares outperform gilts.<\/p>\n
Since 1977 the median new shares issued on the stock exchange has delivered a negative rate of return, even with dividends reinvested.<\/p>\n
On average, a quoted security has a life expectancy of just 7.5 years over the 90 year period studied. No wonder short-termism\u00a0is rife.<\/p>\n
Just five companies out of the universe of 25,967 in the study account for 10 per cent of the total wealth creation over the 90 years, and just over 4 per cent of the companies account for all of the wealth created.<\/p><\/blockquote>\n
So, what is to be learned?<\/p>\n
First, the stock exchange\u00a0is not a business funding mechanism: it is a business exit strategy for most companies.<\/p>\n
Second, most people are fools to take part in this game.<\/p>\n
Third, if you\u00a0insist on taking part only invest in the best stocks.<\/p>\n
Fourth, since you have no way of knowing which ones they are, invest in a market tracker.<\/p>\n
Or fifth, buy gilts.<\/p>\n
But whatever you don't believe the story that the market deliver higher rates of return than government bonds:\u00a0 96% of it does not.<\/p>\n","protected":false},"excerpt":{"rendered":"
As many readers will know, I am not the greatest fan of stock markets. I consider most activity on such markets to be exploitative because
Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[],"class_list":["post-43495","post","type-post","status-publish","format-standard","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/43495","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=43495"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/43495\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=43495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=43495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=43495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}