"I really liked the audio on Friday reviewing the markets - objective. This is key for me in my decision making process. You and David are a formidable team for investors!

"What are your thoughts right now with all the problems in the West on a buy and hold strategy say in 10/15 year time span. A buy and hold strategy in the US over the past decade has been poorly repaid."

Eoin Treacy's view Thank you for your kind words and for a thought provoking question. 10 to 15 years is a long time and investment fashions can change a great deal over that timeframe. There are therefore a number of considerations one needs to take into account when assessing such long-term investment potential. I believe some of the most important are timing, secular themes, currency movements, valuations and governance.

A piece David wrote for FM190 on March 24th 2000, entitled "Will This List of Boring Stocks Outperform the NASDAQ at Yearend?" may be instructive. Here is a section:

However, depressed share prices among the more profitable companies will never last because they are an anomaly. Investment fashions change; companies announce share buybacks, receive takeover bids from other firms or managements arrange buyouts. The tables below list old economy stocks that would be candidates for my recovery portfolio.

The S&P 500 has spent much of the last decade in a range which has included impressive cyclical bull and bear market cycles. The present chart action suggests it has entered a bear market environment. Investors should feel under no pressure to rush in.

On a total return basis, the Dow Jones Industrials Average has outperformed the S&P500 by a wide margin over the last decade. This is at least in part because its constituents are primarily large globally diversified companies. However, the weakness of the US Dollar over the same timeframe has made both indices unattractive from the perspective of a globally oriented investor.

The so called "Old Economy" has, on average posted, an impressive performance over the last decade driven by the emergence of China as a major demand driver and the inability/unwillingness of supply agents to increase capacity. We have referred to the secular bull market for commodities as Supply Inelasticity Meets Rising Demand for much the last decade.

Companies with excellent earnings, solid records of dividend increases and exposure to the growth of the global middle class have come more to the fore during the current crisis. While not limited to S&P's list of dividend aristocrats this designation does offer a useful starting point for research into Blue Chips.

The USA and Europe's debt remain the biggest threats to global growth. The problem with excess debt accrued over a long time is that it takes a long time to pay it back and to absorb the fiscal adjustments required to do so. Asia's problems with inflation and higher wage expectations are not unexpected and are typical of high growth economies. This does not mean that they can simply be ignored. Continued improvements in monetary, fiscal, economic and corporate standards of governance are required for impressive growth trajectories to be sustained.

The Dollar has steadied somewhat against the Euro over the last few weeks but Asian currencies remain, on aggregate, in consistent medium-term uptrends against the Dollar. I believe the odds are solidly in favour of Asian currencies continuing to appreciate against the US Dollar over the next decade. A correction would likely provide an attractive entry point once demand begins to reassert itself.

Countries with expanding middle classes such as Indonesia and the Philippines have been relative strength and absolute return leaders. There respective valuations are not at troublingly high levels but they are among some of the highest nominal levels relative to other global indices.

Chinese infrastructure development has been an abiding theme for the last decade. Infrastructure development, particularly across India, other high growth economies across South East Asia and Latin America should help sustain demand growth in this decade. However, price action suggests investors are showing a preference for consumer led sectors focused on the growth of the middle class. These sectors have moved to outperformance and retain relative strength across the region.

Asia, with the exception so far of Indonesia and the Philippines, has not been immune from the selling pressure which enveloped Europe and the USA. Globally oriented consumer related shares in the USA and Europe have also been notable for their relative strength. Asia remains a region with strong growth, low debt, improving standards of governance, firm currencies and increasingly well-off populations. Significant corrections in consumer related sectors could be regarded as medium to long-term entry opportunities once evidence of support building is evident.

At some point, the USA will enter a new secular bull market. It will have to overcome its debt burden and deteriorating standards of governance to do so. The country has demonstrated fortitude and ingenuity in the past and can again in future. This is not yet an idea whose time has come and the price action does not yet reflect it, but I would not like to be too bearish of the USA over the long term. The Dow/Gold ratio alone indicates that when gold's bull market eventually runs its course, a buy and hold strategy in the Dow Jones will be a very attractive investment.