Cashflow and equities remain strong

Fund manager's comment

In the past few years financial markets have either punished or lavishly rewarded those who dared to...

In the past few years financial markets have either punished or lavishly rewarded those who dared to invest in equities. So what will it be in 2005 - another year of 10% to 20% stock market returns, or one where it is better to leave cash in the bank? In 2004, the preferred assets were emerging market equities, commodities, corporate bonds and commercial property. Many equity markets remain attractive: for example, in the UK the combined dividend yield plus the value of share buybacks is currently running at about 4% per year. This compares favourably with an inflation target of 2%, or a g...