UK Equities – return of the bull market?

30th May 2012

To our regular readers, this will come as no surprise as 10 years' worth of bad returns will generally mean valuations become depressed and sentiment grows weak, which in turn lays the foundations for a long-term bull market.

The following chart comes from Citigroup and plots, in both real and nominal terms, the rolling 10-year returns from UK equities all the way back to 1880. You will notice each of the three raging bull markets of the last 130-odd years  – the 1920s, the 1950s and the 1980s/90s – were preceded by a period when equity returns were extremely poor, sufficiently so that the rolling 10-year nominal returns came close to zero while real returns  turned negative.

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