The long death of a savings man

Thomas Moskovics once confined to me, tongue-in-cheek: “I do not understand shares. I am more of a bond-man.” Thomas is the owner of Austrian’s biggest private bank, which is more of a piggy bank than a traditional commercial bank: its billion-euro-family fortune is invested in absolutely risk-free deposits, mostly with the German Bundesbank, as he eyes even the ECB with some suspicion. So he’s not even much of a ‘bond-man’. This may sound eccentric, but I can sympathise.

For most of my life as a retail investor I have prioritised bonds over shares. The clear-cut math of the former had more appeal to me than the fickleness and volatility of shares. Too much depends on decisions of ambitious CEOs whose financial gratification depends on massaging the share price. They buy back shares, instead of investing; they increase company debts to boost earnings per shares; overpay on dividends, mergers and acquisitions that have little merit other than satisfying vanity, megalomania and being the pretext for extraordinary pay cheques. The result is unexpected volatility, the destruction of share value and crisis dottiness.

Stock markets tend to overreact. Shares have a habit to...