Summary & Conclusion

Investors had better get used to extremely difficult UK and Global market conditions and a new definition of risk, since the corrective process that is underway will take many years. We believe that those who can successfully navigate the numerous market perils and maintain their purchasing power will eventually be in a position to pick up distressed assets very cheaply.

Safe havens that could help investors protect their wealth will be gold, high-quality stocks with sustainable cash flow that pay a dividend and potentially the currencies of nations that benefit from their natural resources.

Potential pitfalls that could be avoided include exposure to the broad stock market indices, overvalued property markets, debt instruments such as bonds which may not be as credit worthy as they appear, and banks/ financial institutions as a consequence of counter-party risk and stretched balance sheets.

From Boom to Bust: How We Got Here

Between 1988 and 2007 the world experienced a huge economic boom. During this period the price of stocks, commodities, bonds and property all rose to historic levels.

As a result, many of us felt wealthier and enjoyed a luxurious lifestyle of new cars, second homes and increased consumption. Much of this affluence however was created by massive increases in public spending and private borrowing and not as a result of prudent investment in productive assets. Read more...