12. March 2026 | Dr. Thomas Hauser
The Wages of Fear
This is firstly the title of a 1953 film; but secondly an apt description for the involuntary thought that comes to mind when analysing 100 years of Swiss equity returns. Real equity returns - after deducting inflation - are the most meaningful basis for comparison with today, given that inflation in Switzerland is currently virtually zero.
Exactly one third of the years brought negative returns. At times there were even several consecutive years with negative returns on equity. Equity investors truly need strong nerves when sustaining losses of more than a quarter to almost half of their investment's value over several years – or prudent advice and planning beforehand, to ensure that only funds that can genuinely be committed for the long term are ever placed in equities.
Annual returns on gold and equities in Swiss francs
|
Number of consecutive years
with negative equity returns
|
How often does this occur in 100 years?
|
Average slump
|
|
1
|
11 times
|
-12%
|
|
2
|
7 times
|
-28%
|
|
3
|
1 times
|
-31%
|
|
4
|
0 times
|
---
|
|
5
|
1 times
|
-48%
|
Now let's move on to the wages for these tribulations. The legendary investor André Kostolany once said: “Stock market profits are compensation for pain and suffering. First comes pain, then comes money.” Talk about hitting the nail on the head! Real returns on equities were 5.7% per annum despite all of these crises — some of them even of historic proportions. This means that investors who stay invested will double their initial sum after 12.5 years and quadruple it after 25. So keeping fear in check through understanding and discipline most definitely pays off in the end.
