As we navigate the last months of his HSC year with our 18-year old son, we’ve decided that share markets are just like teenagers. They are wonderful when you stand back and take a long run perspective – but on a day to day basis, well, they don’t always behave the way you want them to.
And if you think about it, that is perfectly normal. In fact, if our teenagers didn’t ever have an outburst, were always home on time, and kept their room perfectly tidy, we’d start thinking that something very strange was going on.
And it’s the same with share markets. They don’t always behave the way we want them to. Most of us would prefer that they rose on a steady trajectory – but they don’t. But then, they probably wouldn’t give us as much long term reward. Because it is this very uncertainty that is why we can expect shares to return more than cash or bonds over the longer run.