The bear market in equities that began in 2000 has become so severe that investors would have been better off owning government bonds over the last 16 years. From the start of 1987, the JP Morgan global government bond index has returned 234.4 per cent compared with a 188.2 per cent return from the MSCI World equity index.

This long-term outperformance of bonds over equities runs counter to financial theory, which states that investors in shares should be rewarded for taking risk.

It has also upset the calculations of pension funds and insurance companies, which have had heavy weightings in equities in the belief that shares would outperform. Their finances have sharply deteriorated, with many pension funds forced into deficit.

The bear market, which has seen share prices fall in many countries since their peaks in 2000, has also diminished the enthusiasm of retail investors for equities. As popular capitalism grew in the 1990s, so did the number of private investors buying stocks, particularly as a means of providing for retirement.

Many of those investors will have lost money and will be rueing the day they moved into the stock market.

The current bear market has been the longest since the second World War, although it is not yet as severe as the 1973-74 downturn or the 1929-32 Wall Street crash.

Share prices have plunged from the dizzy valuations they reached at the height of dotcom mania in response to falling corporate profits, a slowing global economy and geopolitical tensions. - (Financial Times Service)