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Tuesday, 26 Jul 2011
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Stock Market Returns

In the last 75 years the annual compound return from the All Ordinaries index excluding dividends was 5.76%. It’s a useful number to know because this is what we sell. The past as an expectation for the future.

When your spouse reads in the Herald Sun for instance that the average return is 5.76% it plants the expectation that the family super fund you’re running from the study upstairs without their involvement was up at least 5.76% every year and will be up 5.76% next year.

And when you ask your broker or financial planner what sort of return you can expect from their services the truth is that they have no idea what’s going to happen in the next year but they will quote you 5.76% because 5.76% is all they have to go on.

If the stockmarket was a “Matrix”

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