Cash can beat shares over surprisingly long periods

Interesting but nonsense mainly.

One market (the UK) where devastated financials, miners, and oil majors dominated the index.

Also, the rates for cash that have been used don't seem to be applicable to larger amounts. A bit like using the 4% €1,000 a month rates one used to see here.

Plus they seem to ignore tax.

And in any event interest rates are zero or close to zero now and should stay that way for quite a while.
 
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cremeegg said:
Maybe that tells us something about expected returns on equities.
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Equities should outperform quite considerably.

Cash is not where you want to be over the next 5/10/20 years.

We are in an era where people who stay in cash long-term will end up destitute like the people who held British war bonds.
 
the FTSE 100 is a very poorly diversified index considering how important it is , energy , financials and miners make up a disproportionately large proportion
 
Sarenco said:
How could you possibly know that?

Fixed income investments have certainly beaten equities over 5/10/20 year periods in all developed markets in the past.
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Prospective returns are primarily a function of how assets are priced right now. On that basis, I wouldn't invest in fixed income with my worst enemy's money. Meanwhile, European equities are trading at what, 15/16 times? More or less average basically. And it's stated policy to keep interest rates behind inflation for the forseeable future. That is not an environment in which one wants to be in cash.

Nobody can predict the future, but based on current valuations, how can fixed income outperform equities over the medium to long term?
 
Gordon Gekko said:
Prospective returns are primarily a function of how assets are priced right now. On that basis, I wouldn't invest in fixed income with my worst enemy's money. Meanwhile, European equities are trading at what, 15/16 times? More or less average basically. And it's stated policy to keep interest rates behind inflation for the forseeable future. That is not an environment in which one wants to be in cash.

Nobody can predict the future, but based on current valuations, how can fixed income outperform equities over the medium to long term?
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totally agree, when you look at where most of the money since 2000 has been going its into fixed income not equities. Probably in 2000 after the 80s and 90s bull market was the time to switch from equities to fixed income. So much money now wants to be in fixed income so we are seeing the ridiculous situation of negative interest rates.
 
I certainly agree that the expected return on equities is higher than the expected return on fixed income investments over any medium to long term investment period. However, the markets don't always meet our expectations.

The FTSE Global All Cap Index has a current PE ratio of 21. Stocks are hardly cheap at the moment.
 
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