VIEWPOINT 3

THE GREAT ILLUSION

I doubt whether any of the myriad of readers of this blog fall into the category of “big-time investors” – you're all too sensible and down-to-earth for that!  And if you are like me, you have neither the money nor the inclination to “bet your shirt” on investing.

However there are many such individuals, spending time, nerves and energy trying to get more (and more and more and…….). They are in a constant state of “fright” as at any given moment they might be losers rather than winners (personally I think they are losers anyway, to embark on such a path). They look, especially in these difficult times, for safety and it has become a “game” to find a “safe haven” where they can park money and make more.

If only they could understand….the whole concept of a “safe haven” is crap – it doesn’t exist (except between their ears); look at some of the things which are/were considered “safe” (whatever that word means)…

Government Bonds – a combination of weak economic growth and market volatility has pushed returns down to record lows at the same time as borrowing levels have hit new highs. Investors are therefore getting a lower income, backed by weaker quality government finances. A safe haven….ummmm NO.

Gold/silver/oil – if you have followed prices over the last 3 – 6 months you would have noticed that the prices have been up and down quicker and more times than a (successful) prostitute’s knickers! You can win/lose very large sums in minutes. A safe haven….ummmm NO.

Currency (specifically Swiss Franc) – a few weeks ago, the Swiss government decided that their currency would no longer be a “plaything” for the rich and almost overnight placed a level on the value of their currency, so no more possibilities of earning vast rewards. A safe haven….ummmm, reasonably stable.

There is only one sure “safe haven”. In such troubled times keep liquid; by that I mean don’t lock your money away where it could lose value; you may never ‘make’ money but you won’t lose it. This is a very personal view, of course and whether you agree with it or not depends upon your view of “risk” and how happy you are taking it….

And who knows what will happen after the Eurozone “bigwigs” have had their meeting (after meeting, after meeting…..ad nauseam).

Until next time (with liquidity and safety),

Peripatetic Scribe