24. Investing in a Shark-Infested Market

As harrowing a place as the stock market is today, Scottish transplant Jim McCaughan believes it represents a great opportunity for long-term investors with stomachs of iron and nerves of steel.

“The returns on the underlying capital are very high,” he argues. Of course, investors must screw up their courage because a market dominated by the high-frequency trading (HFT) firms looks very dangerous. McCaughan recommends that investors commit to the market long term and ignore as best they can the wild, short-term price swings.

McCaughan is the CEO of Principal Global Investors, which manages $212 billion in assets, including those held by 12 of the 25 largest U.S. pension funds. He understands the retail ...

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