GROUND FLOOR: The fact that bond markets outperformed equity markets over the past 15 years has sent a shiver down the spine of everyone whose mantra is that equities are for the long term. Fifteen years is pretty long term for most of us.

Basically, the news that the JP Morgan global government bond index returned 234.4 per cent since 1987 compared with 188.2 for the MSCI World Equity index is saying is that, over that time span, governments performed better than private companies.

Now that's a kick in the teeth for capitalism if ever I heard it and flies in the face of what most of us experience in our day-to-day lives.

Clearly the returns have been skewed by the dramatic plunge in valuations following the dotcom debacle and many decently run "old economy" companies found themselves caught up in the middle both ways - as markets went up their share prices lagged behind and as markets plunged dramatically no corporate reputation was left undamaged.

But is it really the case that industry has got it so terribly wrong while politicians (often the last staging post for people who wouldn't have got a decent job doing anything else) have had the last laugh?

The whole thing about return on your money is that the riskier the investment the more you should get back for investing in it. That is, if you're going to get anything back at all because obviously the riskiest investment can mean losing everything. It's a bit of a balancing act and it's the balancing act itself that went so spectacularly wrong in the past few years.

Returns were being generated by the bigger fool principle rather than dividends being paid from company stock. So that the only way you were making money as an investor - even if you were investing at the top end of the "new" market in companies like Microsoft - was to be able to sell your shares to some other idiot at a higher price.

None of the technology companies paid dividends even if they could afford to do so. Their rationale was that they ploughed the money back into the company (or into its directors' pockets) but that the increasing value of the company meant the shares would always be sold at a profit. That was never a sustainable argument even if it held good for most of the 1990s but everyone got sucked into it.

I still believe that well-run, well-managed companies offer far better bang for your buck than governments which are basically made up of people who have pet projects in mind but whose main aim is to get re-elected every few years and who will back the most ludicrous decisions so that they'll stay in a job. But I suppose the last few years have shown us that industry can be equally incompetent. And not always the ones you expect. At its simplest, most industries develop a product and try to sell it for the highest possible price. When it works, it works well. When it doesn't - well, you could be talking about the book trade.

There is one certain fact in most markets and that is that the more a particular product is demanded, the higher the price. New mobile phones, for example, are priced at a premium so that they become a kind of status symbol. Fashion items often have waiting lists even though the price is in the thousands. Hardly rocket-science I know, but it is, apparently, rocket-science to people who sell books.

I rarely write about the book trade because the author is right at the bottom of the pond when it comes to the business aspect of selling books.

The industry itself is full of totally committed people who truly love books but when it actually comes to pricing them the trade seems to go against all the principles of selling that I've ever encountered. This is manifested mainly in the fact that the more a particular book is in demand, the cheaper it actually gets.

At the moment, the biggest selling book with the internet retailer, Amazon, is Harry Potter and the Order of the Phoenix. The latest instalment in the Harry Potter saga is not actually published yet but it's due to hit the shelves in the middle of June. Since it's now a couple of years since the last Harry Potter and since the phenomenon shows no sign of abating, it's clearly going to be a massive seller.

The publisher's price on the book is £16.99 sterling (€25.25 ) but Amazon is selling it on a pre-order basis at £8.49. I know that parents everywhere will want to buy the book at the best possible price for their devoted Harry Potter offspring but it seems to me that offering a sure-fire best-seller at half-price is simply buying market share very expensively. And I'm sure many parents have spent a good deal more than £16.99 in the past in buying less enduring gifts for their children.

Clearly Amazon has always tried to sell books at knock down prices but why in heaven's name do you need to go after market share to the extent of losing 50 per cent of the potential return?

None of the Harry Potter merchandise was sold at half-price but it didn't stop parents buying spell kits and plastic brooms for considerably more than the cost of the book.

When the movie came out hordes of people went to see it but they didn't demand half-price tickets for a couple of hours enjoyment. It seems absolutely insane to me that an industry would choose to lose half its income on a premium product at the time it's most in demand.

If the hardback sells half a million copies (and it'll probably sell more) the potential turnover is £17 million. But the book trade will only make £8.5 million.

Yet the entire Harry Potter industry is worth billions. Surely we can't always believe that the book, the spark that created that industry, should be it's cheapest and most ill-regarded product? Yet that's how the trade itself seems to see it. And it's a complete mystery to me why.

Choosing books over bonds was a good personal decision for me. But for investors? Harry Potter or Bertie Ahern? The decision is yours!