As promised, the post below is the first installment of my new column, ‘The Undercover Economist‘. These columns are published in The Financial Times - see the column home-page here.
An article written by Tim Harford on the 29th of October, 2005.
Dear Economist...
Should my co-workers and I accept a pay cut to preserve our jobs?
David A, London
Undercover Economist
Here are the chief investment lessons of the financial crisis for today’s young people: they should be buying more shares and running up debts to do so. I’m not saying that the market is undervalued – how would I know? I am merely suggesting a way of reducing risks.
If that seems strange, reflect for a moment. We know that stocks can be very volatile. We also know that some generations have been luckier than others when it comes to the performance of the stock market. The baby boomer who started regular purchases of US stocks in 1970 and sold up in 2000 would have felt pretty sick after the awful bear market of 1974, but in retrospect his timing would have been perfect, filling his boots with bargain late 1970s and early 1980s shares, and selling out right at the top. His daughter, entering the stock market in 1995 and aiming to retire in 2025, would have spent the past 13 years buying shares at prices that now seem to range from high to extortionate...
Comments have been closed for this article.