Did stocks really rally?

If you think that last year’s 53% return from listed equities on the GSE was too enthusiastic and that stocks may not be worth investing in now, I’d like you to take a look at the chart below.

As can be seen from the chart, 2017’s returns takes us back to a little above the level the GSE Composite Index was in 2014. In fact, equities have returned only a measly 14% since 2014. Assuming an average rate of inflation of 15% over the same period, long-term investors have actually lost money despite the monster rally last year.

This does not mean that stocks are headed for another rally to make up for the poor cumulative growth over the last few years. What it does mean however, is that there should be little fear about irrational exuberance in stock values. If equities are barely returning enough to keep up with inflation, it is difficult to argue that stocks are overvalued.

 

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Jerome Kuseh

Accountant | Economist-in-Training | Finance Blogger
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2 comments

  1. What is the current best performing stock on the market as at closing friday January 26th, 2018. Will appreciate your feedback.

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