According to the author, the past two years have reminded us of why equity investments have historically been more profitable than bond investments: quite simply because it is more risky to invest in shares, and because equity investments may from time to time give rise to frustrations, unpleasant feelings and considerable capital losses.
Mr. Henriksen makes an estimate of the potential return on equity investments in the years to come. According to calculations made by Jyske Bank, a buy-and-hold strategy will hardly be as profitable in the coming years as it was in the 1980s and 1990s. He also establishes that the best periods in the equity market often follow the worst imaginable situations. This was confirmed during the month following 11 September 2001 when the KFX index rose from 236 to 273.
Finally, Mr. Henriksen recommends a more dynamic market approach according to which investors buy when the market shows signs of weakness without forgetting to collect profits when the market is strong.
Read the Focus http://www.xcse.dk/uk/nyt/Borsfokus/Borsfokus.asp
