Stocktake

Must read:The latest Credit Suisse Global Investment Returns Yearbookis, as always, a must read. It examines equity performance since 1900 in 19 countries, including Ireland. Key findings include:

No other asset (bonds, property, gold) matches global equities’ long-term record, with an annualised real return (after inflation) of 5.4 per cent. Bonds, at 1.7 per cent, are next best;

Almost all equity gains come from dividends;

Both equities and bonds perform best after currency weakness, not strength;

Equities perform best in times of low inflation and suffer losses in times of high inflation;

Real annual returns in the US were 6.2 per cent, the third highest of the 19 countries. Exclude the US, and global returns fall to 4.8 per cent.

Ireland is an equity laggard, with annual real returns of just 3.7 per cent. Irish bonds (0.9 per cent) have also underperformed.

Italy fares worst (1.7 per cent), while Australia, at 7.2 per cent, is the “lucky country”.

Shining example: Gold has had a great decade, but its 112-year history is less impressive, the yearbook notes, with investors netting real annualised returns of just 1 per cent. Its reputation as a haven in times of financial crisis is not borne out by history.

During “marked deflation”, its real return was inferior to cash and bonds. During extreme inflation, its real return was close to zero. It is volatile, and can lag badly, losing four-fifths of its value between 1980 and 2001.

Gold’s long-term capital appreciation is similar to housing. But “the pleasure of owning and storing a gold bar is somewhat limited”, the yearbook notes, while homeowners at least “receive the benefit of living there”.

Roubini bullish:Has Nouriel "Dr Doom" Roubini finally turned bullish? "We're a believer; we're celebrating," said Roubini's director of equity and allocation strategy recently. "We think the rally has legs."

When even Roubini is bullish, contrarians joked, you know it’s time to sell. But in truth, Roubini is no raging bull. The next few months may be kind but the rally will “fizzle” out in the second half of the year, he said on Twitter, with the SP 500 likely to end the year slightly lower than today.

Roubini’s record as a forecaster is mixed. In 2006, he warned the US was facing a “once-in-a-lifetime housing bust” and a “deep recession” but his record has been less stellar in recent times, remaining bearish even as the market doubled.

Economic forecasts are one thing, but why is Roubini even attempting to predict short-term market movements?

As an economist, he’s largely respected. But a savvy market strategist? Not really.