Monday, January 06, 2014 5:10:13 PM
Just to clarify
The stacked green coloured cash and blue coloured stock values in the first of these charts is scaled to the left hand Y-axis, which is log scaled, which makes cash look much more heavier. i.e. the top of the blue bar is the combined sum of both cash + stock value.
I had to log scale that axis otherwise you don't get to see much/any of the earlier years. Linear scaled is more or less just a flat line over most of the earlier years and then a large up-rise for later years.
A better visual guide as to cash reserves is the second chart which shows the cash reserve % weighting over time.
Cash reserves rose somewhat abruptly (if a decade+ long period can be classified as being abrupt) from the 50% initial start date level (1871) up to 80%+ levels as in the late 1870's there was predominately deflation, whilst cash was earning something like a +5% to +6% nominal return i.e. was exceeding 'inflation' by close to 7%/year real.
Whilst nominal share prices broadly sideways zigzagged in the late 1800's, real share prices rose strongly, dividends were good and so was cash, as such 'AIM of real share price' accumulated much cash reserves, depleted stock exposure during those years. Which turned out to not only be rewarding, but also a reasonable precursor to the sizeable declines in real share prices in the early 1900's (up to WW1 years).
The stacked green coloured cash and blue coloured stock values in the first of these charts is scaled to the left hand Y-axis, which is log scaled, which makes cash look much more heavier. i.e. the top of the blue bar is the combined sum of both cash + stock value.
I had to log scale that axis otherwise you don't get to see much/any of the earlier years. Linear scaled is more or less just a flat line over most of the earlier years and then a large up-rise for later years.
A better visual guide as to cash reserves is the second chart which shows the cash reserve % weighting over time.
Cash reserves rose somewhat abruptly (if a decade+ long period can be classified as being abrupt) from the 50% initial start date level (1871) up to 80%+ levels as in the late 1870's there was predominately deflation, whilst cash was earning something like a +5% to +6% nominal return i.e. was exceeding 'inflation' by close to 7%/year real.
Whilst nominal share prices broadly sideways zigzagged in the late 1800's, real share prices rose strongly, dividends were good and so was cash, as such 'AIM of real share price' accumulated much cash reserves, depleted stock exposure during those years. Which turned out to not only be rewarding, but also a reasonable precursor to the sizeable declines in real share prices in the early 1900's (up to WW1 years).
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