Perennial Investment Partners (Perennial), an Australian Boutique Investment Firm, has released a paper titled - Riding the 2007 Investment Rollercoaster – An Investor Update. The paper was aimed to help the clients of Financial Planners understand what is happening in global financial markets.
According to Perennial, despite the huge jump in markets now-a-days, 2007 returns to date are certainly down on the plus 20% investors have become accustomed to over the last few years.
Provided investors have a good constructed diversified portfolio there is no need to panic, history shows us that central banks will act to restore market confidence in times of a liquidity crisis and provided investment fundamentals are supportive (as indeed they are in today's environment), markets will recover.
Perennial went back to 1998 and compared the current liquidity issues to the Russian Bond crisis and the collapse of LTCM in August and September 1998. Overall the company foresees a similar result with property and equity markets recovering to produce positive returns for 2007 but likely down on the 20% plus returns investors have become accustomed to which are unsustainable over the longer term.
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