Cicero de foris
THE stock markets should read their Cicero. Not to understand what happened before you were born, he said, is to be a child all your life. If they cannot read Cicero, they should follow my example, and crib from Jasper Griffin of Balliol, who can. Failing that, they should ask their friends in Barclays de Zoete Wedd to smuggle out a copy of my favourite finan- cial annual, the BZW Equity-Gilt Study, with its built-in memory stretching back to 1918. (The conditions which led to Hitler's rise to power were not the right back- ground for stock market confidence....') The study looks back over seven decades in which bull markets ran for as much as seven years and as little as two, to be followed by periods, almost as long, in which shares moved sideways or down- wards. The bull market of the 1980s, one of the longest, ended with a crash 16 months ago, shares spent last year going sideways and this year have suddenly rushed for- wards — so can we be back in a bull market? Is the time of penance over? The historians at BZW shake their heads. The bad news, they say, is that some time this year shares are likely to be materially lower than they are now. The good news is that this may be the end of the bad news: `There is a fair chance that any major setback in the next year or two will mark the end of the recent bear phase for equities.' Is this, then, a year in which Government stocks will do better than shares? We must hope not, because that usually happens when both of the markets are falling but shares are falling faster. At such times, history suggests that an un- fashionable investment comes into its own: cash.
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