Stockmarkets will recover from the current falls following the World Trade Centre attacks and investing for the long term will pay off, says Dresdner RCM Global Investors.
Seth Reicher, manager of Dresdner's AAA-rated North American trust, says markets have always recovered from past crises. He says markets will recover and continue to grow over the long term.
Reicher says from Pearl Harbour in 1941 to the Ken-nedy assassination in 1963 to Iraq's invasion of Kuwait in 1990, the US markets recovered after just six months.
But the difference now is that the economy was already slumping before September 11.
Dresdner says the World Trade Centre disaster has accelerated and deepened the existing downturn but that aggressive monetary responses will help the economy pick up much more quickly.
Reicher says once expectations adjust, investors can get aggressive, which will mean the downturn is shortened to 12 months from two to three years.
But Dresdner says trying to decide when the market has bottomed is difficult and costly. It believes regular savings over 10 years or leaving a lump sum invested for at least a 10-year period is the best course of action.
Reicher says: “The recent downturn will recover. Successful economies grow over time, companies increase earnings over time and stocks reflect this positively over time. You can never time getting in to any market perfectly right and it is very easy to miss the boat.”