Where’s the place to be?
Even if the pandemic be past; with inflation at 7%, still broadening and entrenching; maritime supply lines in a log-jam; UK political leadership of deplorable quality; and millions of Ukrainians dispossessed of everything except their dignity - my equanimity I admit is in deep disturbance. Mindful some of you are coping with illness, grief and trauma; for your capacity to bear-up under strain I honour you.
My financial fear is that the Bank of England will be not only too slow to raise rates, but also too lenient. Acknowledging to everyone who owes money - and that’s all of us in UK because of our enormous national debt - I sound brutal, but I would willingly accept higher taxes to repay the loans, than suffer an economy squeezed bloodless by interminable debt. I lament our incompetent national housekeeping, especially because it stacks the odds in favour of the Haves over the Have-nots.
For almost as long as I’ve been an IFA (33rd year) bonds (loans to governments and companies) have been losing their power and popularity to equities (shares in companies). Right now, bonds are cheap, and there must come a day when they’ll be good value once more. For as long as financial tightening is more ahead of us than behind, I’ll stay with equities.
The place to be is with a mix of:
Real assets - chiefly property and land, but also precious metals - (nice to see gold have its day, at last),
And diverse equities - in companies / themes robust enough to weather the squalls of present-day trading conditions.
Even though it may lose 7% of its real value over the next year, a portion of cash is always valuable for instant access and for capacity to catch an opportunity that might arise.