If you had known in December 2019 that a global pandemic, war in Europe and extreme inflation would occur within the next five years, would you still have invested in the stock market? 

This column suspects that most investors would have answered “no” at the time. Most likely, they would have decided that those events would cause the stock market to generate extremely disappointing returns over the period.

While that view is entirely understandable given the severity of those challenges, it has proved to be entirely wrong. The S&P 500 index, for instance, has since delivered a capital gain of 73pc. And Questor’s recommendation to purchase the JPMorgan American investment trust, which aims to beat the S&P 500 index, has produced a 115pc capital return since it was originally tipped in December 2019.

Indeed, the stock market has proved to be surprisingly resilient over the long run. Even the most challenging economic and geopolitical events have ultimately failed to do more than cause temporary downturns. Therefore, while the next five years will undoubtedly contain a range of difficulties that cause share prices to decline at times, Questor remains hugely optimistic about the future prospects for the stock market.

As a result, we will continue to shift the focus of our Wealth Preserver portfolio towards equities. The JPMorgan American investment trust is the latest addition to the portfolio. It has an excellent track record of outperforming the S&P 500, which is its benchmark, with its annualised returns being around 120 basis points higher than those of the index over the past decade.

Despite this outperformance, the company currently trades at a 3pc discount to net asset value. This suggests it offers good value for money, with its discount being slightly higher than the 4pc average recorded over the past five years.

Its gearing ratio of roughly 4pc, while modest in comparison to some investment trusts, means its future returns are set to be magnified. Given the positive long-term track record of the US stock market, gearing is likely to prove beneficial. So too is the trust’s focus on both value and growth stocks, as well as smaller company shares, which means it may be less susceptible to temporary changes in investor attitudes towards risk over the coming years.

In terms of its major holdings, there are several familiar names. Microsoft, Nvidia and Meta all feature among the trust’s ten largest positions. Despite this, the company is currently five percentage points underweight to the information technology sector and two percentage points underweight to the communication services sector. 

Clearly, some investors will be concerned about the upcoming US election and the potential for elevated stock market volatility. While this is understandable, in this column’s view the election is unlikely to cause a worsening in the stock market’s performance over the long run. In fact, it could be argued that neither potential winner represents a complete unknown, since they have both already served as president.

Perhaps more importantly, falling US inflation ultimately allows for interest rate cuts and this will act as a significant catalyst for the economy. In turn, this should provide improved operating conditions for a wide range of companies, as well as increasingly buoyant investor sentiment, that together have a positive impact on share prices over the coming years.

To make room for the trust in our Wealth Preserver portfolio, three existing holdings will be sold. They are Worldwide Healthcare Trust, Pollen Street and Real Estate Credit Investments. They have produced total returns of 1pc, -2pc and -1pc, respectively, since being added to the portfolio in the second half of 2021.

In Questor’s view, the JPMorgan American investment trust offers significant return potential over the long run. Its track record of benchmark outperformance and discount to net asset value suggest there are further gains ahead. In addition, impending interest rate cuts could positively catalyse the stock market’s performance over the long run.

Of course, there will inevitably be unforeseen challenges ahead that prompt heightened volatility and at times bear markets. But as the past performance of the stock market shows, simply buying and holding high-quality companies over an extended period has historically provided stunning returns that are simply too good to miss.

Questor says: buy

Ticker: JAM

Share price at close: £10.04

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