CON­SIDER THE FOL­LOW­ING:

Finweek English Edition - - MONEY -

Of­fi­cially, in­fla­tion is 5.4% ( Jan­uary 2013 fig­ure, ac­cord­ing to www.res­bank.co.za). Now we know that over long pe­ri­ods, the dif­fer­ent as­set classes give us dif­fer­ent real re­turns with the long-term av­er­age for eq­ui­ties be­ing around 7%-9% per an­num. So based on an in­fla­tion fig­ure of 5.4% we should ex­pect the eq­uity mar­ket to be re­turn­ing around 14.4% per an­num max (5.4%+9%). The 30-year re­turn f ig­ures sup­port this num­ber.

How­ever, the 10-year fig­ures do not. In fact, 10-year eq­uity mar­ket nom­i­nal re­turns are just un­der 19% per an­num and this should put the CPI num­ber at around 10%. Of­fi­cially, CPI over this pe­riod has been 5.3% which means that the mar­kets have there­fore given real re­turns of just

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