Kneejerk reactions by some investors to the September 11 crises are likely to have been regretted, says one of New Zealand's largest investment management companies.
History had shown investors often experienced "boomer returns in the years following a global crisis", Paul Dyer, head of investment strategy for AMP Henderson Global Investors,said in a speech to Wellington's Chamber of Commerce.
Those who sold stocks prematurely would now be ruing their actions.
"In the first week of trading after the tragedy, markets fell by 12 per cent as frightened investors cashed up in droves," he said.
They have since risen 18 per cent.
"In New Zealand dollar terms, world share prices are now about 7 per cent higher than they were before the attack," Mr Dyer said.
"Clearly, investors who panicked at the time did themselves a disservice."
Quoting figures from the US stock market, Mr Dyer said that on average equity markets had risen 25.8 per cent in the first year after the last 10 political and military crises, and 37.5 per cent over the two-year period.
Examples included the Cuban missile crisis, the two oil shocks and the Gulf War.
"Political and security crises are times when hearts rule over sense," he said.
"Panicking investors take a short-term view, reasoned analysis goes out the window and they rush to sell stocks.
"We've seen this over the last year, with many companies selling down after years of strong returns.
"This is precisely the worst time to sell and the best time to buy, and it can cost businesses dearly.
"Our research has shown that if an individual or a company invested in this kneejerk manner over the last 10 years, it would have reduced their total returns by perhaps one-quarter to one-half."
However, a hedge funds specialist warned that the rise on world equity markets would not last long.
David Smith of Global Asset Management, a London-based funds manager, predicted world sharemarkets would rise about another 15 per cent in the short term, based on loose monetary and fiscal policy.
But he forecast a dive of up to 40 per cent early next year as fundamentals triumphed over sentiment.
