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MARKET COMMENT
By
Carburton Street, London -- Stock market bulls have always believed that equities are the best place for your money if you are prepared to invest for the long-term. Historically the stock market has outperformed most other forms of investment. It is almost certainly better than leaving your money in the bank or buying fixed interest investments such as government gilts. It is almost certainly better than leaving it under the mattress. However these stock market bulls also know that shares do not go up in a straight line and that unexpected events can have a profound effect on their company's share performance. The terrorist attacks on the America in September were one such happening that affected not only US equities but also other stock markets around the world. It is not surprising, then, that those events have unsettled investors. It has called into question the ability of stock markets to deliver the returns that investors have enjoyed in the past. But to deny the capacity of shares to deliver a suitable return is to reject the premise that the underlying objective of almost all businesses to strive for improved performance. And businesses aim to achieve this improvement even in hostile business environments. As investors we have a choice. We could adopt a wait-and-see approach. This implies sitting on the sidelines and waiting for clearer indications that equities are on the road to recovery before investing. But this then begs the question as to how long you should wait. Since September, stock markets have improved almost 20% and since the middle of February the FTSE 100 has improved almost 6%. Wait-and-see has been a favourite strategy adopted by many smaller investors in the past but this has also led those investors to buy at the top of the market and sell at the bottom. But this costly mistake can be easily avoided if investors just invest little and often and learn to take the rough with the smooth. So in answer to the question as to whether it is safe to buy shares yet the answer must be it is always right to buy shares if you are prepared to invest for the long-term.