Mr Thornton knew that great investment opportunities are rare and must be backed with conviction, when you happen across one. He also knew how easy it was to suffer “diworseification”, from a lazy proliferation of “it seemed like a good idea at the time” holdings cluttered across a portfolio.
Turning to the outlook for equity markets – we remain bullish for both global and UK equities. It seems to us that the background conditions are as encouraging for equity investing as at any time since, say, 1801, when the London Stock Exchange was founded.
We know it would be comforting for cautious readers to be offered more certainty as to the likely shape and timing of those promised equity returns. The fact is Anglo-Saxon equities have delivered 6 per cent to 7 per cent a year total returns over and above inflation over decades, if not centuries. But they have never done so at a metronomic, regular pace. No, the truth of the likely shape of equity returns is best expressed in this wonderful observation from light versifier, the late US poet Ogden Nash:
6. “Shake and shake the ketchup bottle. First none will come and then a lot’ll.”
It is indeed hard, we might say impossible, to time the equity markets. And yet it is imperative investors maintain adequate exposure to equity.
Nick Train is investment manager of the Finsbury Growth & Income Trust
Key Points
If you want different performance then you have to do something that others do not
Warren Buffett is one of the most famous buy and hold investors
The background conditions are as encouraging for equity investing as at any time since 1801 when the London Stock Exchange was founded
