One of my favourite Tommy Cooper gags has considerable resonance with the prevailing mood among investors as we limp towards the height of the Isa season. It tells of a motorist in East Anglia who pulls over to ask a local for directions to Norwich. “I wouldn't start from here,” is the reply.
The point of this aside is that the entire fund management and IFA industries are now almost pathologically bereft of optimism. The weight of a previously mythical three-year bear market has soaked the average investment client in gloom and despair and they will take some time to dry out.
Yet Tommy Cooper, in many ways an astute philosopher, had a point. The point being that you can only ever start from where you are.
Take some articles in the press over recent weekends – the general trend has been akin to a Biblical rant that stockmarkets can indeed go nowhere for long periods of time or that we could take 10 years to regain the heights of December 30, 1999. The answer, therefore, is to shun equities and pile into buy-to-let properties instead.
But before I deal with the role of short termism in every major scandal we have endured in recent years, I want to debate the points made about the market.
It is not strictly true to say that the market went nowhere for 20 years in the early 20th Century – this excludes the benefit of reinvested dividends which, when included, make the worst 10-year average around 5.5 per cent a year.
Then there is the point that the market will take 10 years to recover. Let us put it another way – the market will double over the next 10 years and will pay dividends on top. How much better does that sound to a new investor?
We may well have a bruised generation of investors who will limp to their cave and slowly transmogrify into Victor Meldrew but for the next generation of equity investors there is real value and potential. Also, if the beaten generation are prepared to rejoin the party, then they may actually average down their losses and break even sooner. “I don't believe it,” I hear them cry.
So what of the plague of short-termism and the evils of dotcommery?
Year after year, we all have to endure the moralising and predictions of various commentators in the run up to the Isa season. Some are better informed than others but there is usually a discernible trend and, dare I say it, the merest whiff of a bandwagon.
It is, of course, the role of the media to decorate the haunted streets of Moneyville to try and make it a little more welcoming for tourists and us locals. By and large, they do a good job but their predictive powers may be less than prophetic.
The murals and the posters are appearing already – scratch them off and underneath you will find evidence of the last well-meaning campaign promoting zeros as safe alternatives to high-yielding bond funds, which replaced tech funds as the decor of choice (all the rage in March 2000, darling).
Like many IFAs, I found myself seduced by some of this hype and, like many clients, I was somewhat shocked when the cold shower started. Yet every day, the Isa marketing packs continue to land on my desk – corporate bond funds, property funds, gold funds, “make money from a war in Iraq” funds. The list goes on and is almost as long as the malaise that prompted it.
My advice is to try and keep everything in perspective. There is a good chance that what happened before will happen again and the most dangerous words for any investor really are: “It's different this time.” As IFAs, we are trusted by our clients to think a little beyond the hype and trends that buffet us every day – to think like Tommy Cooper.
A client phoned me this morning and said: “Are you my local M2 contact?” “That depends where you're calling from,” I said.
Steve Buttercase is at M2 Financial