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A glass half-empty view of markets

07 Oct 2022 / Insight

By Steve Clapham

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The 20s harder than the last decade

Executive summary

I recently appeared on a panel on the Money stage at the FT Weekend Festival in London. Claer Barrett, the FT columnist and podcaster, was the moderator and opened by suggesting that the panel would try to stay cheerful – I failed to oblige. I thought it might be, therefore, worth repeating some of those off-the-cuff comments here and repeating the advice I gave to the attendees.

Incidentally, the FT Weekend Festival is a fantastic event and I have attended almost all of them as a paying guest (this was my first time as a speaker). Even better, you can now catch up on what you missed in person, online.

I pointed out to the audience that I am a glass half empty sort of person when it comes to investing – downside protection is the number one priority in my view. I then explained that I was not around as an investor in the 1970s, but that is the only period I can recall, other than the 1929 Depression, where the circumstances were similar to today. The economic outlook has never been this bad in my experience and we start at a point of likely significant over-valuation of markets. You should be resigned to seeing your real wealth decline in the next ten years and you should have a plan to mitigate the adverse impacts.

This is not just my view. One of my friends, who manages a billionaire’s family office and has immense resources at his disposal, recently passed a similar message to his employer. Let’s first look at why the prognosis is so gloomy.

Most of what I shall discuss is focused on the US and UK, the two most important markets for me and my readers, but the symptoms are generally pretty consistent globally.