I have attended several investment house presentations over the last few months, hearing both presenters and fund managers frequently state that all the current volatility in the financial markets is somewhat overdone. However, I do accept that it is still worrying. Is the world economy about to enter a deep global recession, which in turn will drag equity values down further or not?
We have to take into consideration the alternative safety of cash, against the longer-term certainty that cash will never help us meet our lifestyle goals, for two reasons:
- cash is virtually at zero basis points, almost everywhere in the developed world; and
- only riskier assets can offer the possibility of investment returns sufficient for us to meet our own personal targets.