How long is long term? The case for equities

All ingrained beliefs, however deep, face occasional challenges. The trick is to understand whether the challenge is legitimate, in which case we must be willing to revise our beliefs, or opportunist and/or short-sighted, in which case we should not

Long-term investors generally share an ingrained trust that over time equities as an asset class will protect the real value of invested capital. Ultra-long-term studies (eg Barclays Capital’s annual Equity Gilt Study) indicate the outcome can be very much better than mere ‘protection’. How long ‘long term’ actually is or what is meant by ‘over time’ is by general consent taken to be a period of a decade. Recent experience challenges this view. Sceptics have been able to protest equities have not only failed to offer real protection of capital but have lost nominal value over a decade. T...