Putting Negative Investment Returns in Context - April 2008

The March quarter was the worst quarter on the Australian share market since the December quarter of 1987. After a rough five months, most superannuation funds are now recording negative returns on a 12-month ended basis and virtually all are in negative territory so far this fi nancial year. This is naturally very disconcerting, particularly for those near to – or in – retirement for whom it’s not so easy to top up their funds and take advantage of lower share prices. It’s made worse by all the confusing commentary floating around. I think that the global economic downturn is unlikely to be deep and long and that shares have seen the bulk of the damage and may have even seen the bottom and that either way they will be back onto a sustainable rising trend by later this year. But there are many out there who see a bear market stretching over several years on the back of the fallout from the US sub-prime crisis. In times of uncertainty like the present it’s useful to put prognosticating aside and put things into historical perspective.