Markets decline by USD 13 trillion!

Investors all around the world are told by investment banks and their brokers that buying and holding shares in various industries will be rewarded handsomely -- well, "at least in the future", as they say. In reality they are being bamboozled by the sandman and his busy helpers.

New York, NY -- February 27, 2003 -- Global Investment Returns Yearbook, a study of long-term investment returns by Elroy Dimson, Paul Marsh and Mike Staunton from London Business School concluded that in the years 2000-2002 the worlds equity markets have lost $2,000.00 for every man, every woman, every child on earth. Or, otherwise translated, as it is more plausible that if 2 % of the earths inhabitants are investors in any type of stock scheme the individual loss is more of a breathtaking $100,000.00 per investor.

Investors all around the world are told by investment banks and their brokers that buying and holding shares in various industries will be rewarded handsomely -- well, "at least in the future", as they say. In reality they are being bamboozled by the sandman and his busy helpers.

Looking critically at the data provided from the London Business School in the examination of total returns since 1900 for stocks, bonds, cash and foreign exchange in the UK and 15 other major markets, covering all the main North American, Asian, European and African markets that have existed over the period, it becomes evident that it may take up to 50 years (as explained in the example of Japan) for a return on an investment in the equity market to make a positive return.

US markets in general have done exceptionally well in all scrutinized quantitative investment circles. Though, this trend might not continue in changed times after scandals like Enron and WorldCom erupted and the whole world learned that billion dollar corporations with ties to the White House and other high-level politicians would rather shred documents than tell the world the truth about their business conduct, or their accounting practices.

Is it only a coincidence that since US corporations are under closer monitoring by watchdogs domestically as well as internationally, predictions of exorbitant growth and gains in share value have failed to come to fruition? Of course there have been a fair share of accounting scandals in Europe and in Asia, but these markets never showed such arrogant supremacy, not even the Japanese in the late 1980s, when they dominated the worlds equity markets. If the game has to be played by the rules, and that is what it is, a game where some lose for others to win, who will study the rules again?

These days, plenty of newly emerging private equity firms and boutique investment banks are banging on investor doors, looking to raise billions of dollars to buy distressed debt and undervalued assets in the hopes the underlying companies can be turned around. The question though is, can these companies be turned around or will it be more like throwing good money after bad?

The uncomfortable fact remains that the average investor is in for a long waiting period to see a ROI -- even with periodic bull markets.

Alexander C. Brosda has been included among others in Marquis Whos Who in Finance and Industry and Who's is Who in the World since 1997. He has been bestowed countless community, civil and international awards for excellence in business. He was nominated for Entrepreneur of the Year Award by Ernst & Young LLP and USA TODAY in 1997.