By Alan Steel

An edited version of this article appeared in The Scotsman on Saturday 8 June

Imagine it's mid October 2007. Most World Stockmarkets had reached new highs since the DotCom bust 7 years earlier. The FT100 was only a couple of hundred points short of its record high. Economists were confident things looked good enough for a new economic cycle following the collapse of Northern Rock given the reassurance of World Governments. Perfect.

So - like Rip Van Winkle - you slip off to sleep, feeling relaxed about your investments. You wake up this week, 68 months later, and before you have a chance to check your investments a well meaning pal warns you about what you've missed during your long slumber ............

Apparently you slept through one of the worst property busts in living memory, a financial panic of epic proportions, the worst recession since the Great Depression of the Thirties, the virtual collapse of major banks here and in the US, at least 2 Fiscal Cliffs, massive printing of money by World Governments to ward off economic collapse, European crises including the much predicted bankruptcy of Greece AND the end of the Euro. If that wasn't bad enough there was a BP Gulf oil fiasco wiping billions of UK share prices, a Japanese Tsunami, and a long list of other dramas reported nightly on telly.

How much would you expect to have left of your portfolio given all that? Half? A third? Any of it? You open the newspaper hardly bearing to look. What do you discover? To your amazement you find the FT100 Index (as I write this) is only down 4%! Now that ignores inflation and charges, but I'm sure you get the point. But while you slept, Corporate profits rose by over a third, Valuation ratios are much lower, Interest rates have plummeted, Gold prices jumped over 80% , and Oil's up a third. So do you think equities are cheap or expensive ?

Yet experts tell us it's too late now to invest in them - things look too frothy - that another crash is round the corner, and inflation will kill us off, if rising mortgage rates and energy prices don't get us first. Remember they're the same experts who told us at the bottom of the 'markets in March 2009 it was too early to buy any. They're even comparing share prices now to the dangerous days of 1999 just before the Dotcom crash.

Where they get that from is anybody's guess. Earnings from the biggest Companies globally have doubled since then , as have Dividends paid to investors with significant cash on top through share purchases or special dividends , and stockmarkets are now valued at half the price. That's double the value at a 50% discount. Trust me there's no comparison.

I wrote my first article for Smart Money in 1989. What was happening that year? Experts warned of an imminent UK recession while house prices in England fell 16% over the previous year. In October it was reported recession fears deepened as " Stockmarkets continued to fall dramatically." UK inflation was on its way to 9.5%. Interest rates hit 15%, crippling mortgage payers. Elsewhere 11 million gallons of crude were dumped off Alaska , thousands were killed in Tiananmen Square in China, and Soviet Russia still held it's iron grip.

In October '89 the FT100 was below 2100. What is it today ? It's up over threefold!

The task in my first "Smart Money" article was to look forward to the following years. Sadly I can't lay my hands on the original piece, but there's no doubt I would have been optimistic, looking forward to falling inflation and interest rates and rising stockmarkets. To be honest it wasn't difficult to be positive at the time. The top song of 1989 was "Don't Worry Be Happy" by Bobby McFerrin. Paying more attention to the words of that song has been miles better for investors over the years than listening to dirges from pessimists.

For the Rip Van Winkles who stuck their PEP contribution in 1988 into the new Neil Woodford managed High Income fund, then fell asleep for the last 25 years, and who've just awakened today, will be astonished to find their investment net of all costs and taxes will have doubled every 5 years. Now I can't promise the same again from similar Income Funds over the next 25 years but I wouldn't bet against it. Sweet dreams!

An edited version of this article appeared in The Scotsman on Saturday 8 June