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Mr Trip said it has proven difficult to hold a long-term view when most models used to predict future outcomes were proven wrong. He said that while there had been a number of “major” financial events in the past – such as the 1987 crash or the dotcom bubble at the turn of the last decade – no previous crisis made the investment community “doubt the future” as much as the credit crisis had done.
Trip questioned how investors should come to decisions on long-term investing, given the developments in the financial markets since 2008. “The credit crisis shattered beliefs in long-term modelling in a way that you really can’t be certain whether your long-term view can be relied on.”
He said there were several ways for investors to react. One was to become more short-termist, identifying bubbles and changing asset allocation accordingly – a short-term, tactical approach that was “undesirable” for a number of reasons, most notably the time associated with each change.
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