Richard Dunbar, investment director at SWIP, explains why strong GDP growth does not necessarily translate into healthy investment returns.
As learned commentators point us in the direction of Asian expansion or Latin American opportunity, it is interesting to note that the academic research does not support this collective enthusiasm for chasing GDP growth. When strategists lay out the prospects for economic growth, sensible investors should make a mental note to look elsewhere in the presentation for the data that really matters. Jay Ritter, in his 2004 paper, and Dimson et al in their 2002 paper, have analysed returns over a century – a timescale within most investors’ definition of the long term. Ritter says most inve...
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