How long can you wait?

Writing in the FT Managed Funds Section, John Authers reviews Elroy Dimson, Paul Marsh and Mike Staunton's 2009 edition of the Global Investment Returns Yearbook. He comments:

The FTSE-100 is still languishing far below its all-time high, set at the end of 1999. According to the yearbook, using the historical risk premium, the odds are only 50/50 that it will get back to that peak by 2018, on a capital appreciation basis.

Indeed there is a 25 per cent chance the FTSE will not even have regained its peak by 2033 (on a total return basis, with dividends reinvested, it should get there much quicker).

Numbers like this suggest anyone aged about 50 in 1999, who invested in the FTSE safe in the knowledge that stocks are best in the long term, would have reason to feel angered.

With the FTSE just over 4000 and with a P/E of about 9 stocks are selling just below intrinsic value on the basis of past history. Have we moved into a new world or will previous patterns reassert themselves? My guess is we haven't moved into a new world - new dawns are often hailed but seldom arise.