5 years and a few days ago, Lehman brothers collapsed and so did the world stock markets short afterwards. This anniversary brings back bad memory to most of us, expect to fund managers ! Why? Simply because fund managers typically show 5 years of performance in their sales prospectus. So mutual funds no longer need to remind you that they lost huge amounts in the 2008 financial crash. The crash happened 5 years so it is now too old to show !
To show you how data from graphs can easily be presented in a misleading way, we had a look at public data from the Index S&P500, which by the way already outperforms most fund managers (read article HERE). When you look at the picture below you see a 5-years graph of the S&P 500 on Google finance. The graph shows a very clear upward trend in the index, with the exception of what happened exactly 5 years ago. But still, this graph already shows a fantastic return on investment if you had invested in the Stock Markets on Sept 26 2008.
To show you how data from graphs can easily be presented in a misleading way, we had a look at public data from the Index S&P500, which by the way already outperforms most fund managers (read article HERE). When you look at the picture below you see a 5-years graph of the S&P 500 on Google finance. The graph shows a very clear upward trend in the index, with the exception of what happened exactly 5 years ago. But still, this graph already shows a fantastic return on investment if you had invested in the Stock Markets on Sept 26 2008.
Now let us take some perspective and look at a second graph, showing 10-year historic for the same index price. The new graph shows a completely different story: there was a massive downturn in 2008, and it took 6 years for the stock markets to recover from it !
The conclusion is simple and it is a warning: when it comes to financial disasters, anniversaries are an occasion for fund managers to start forgetting about the past. And from now on losses stemming from the financial crisis will probably no longer be reflected on most mutual fund's prospectus.