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Some newspapers are starting to break ranks and declare that With Profits bonds and policies are undesirable. Well, we have taken that view for years, and we repeated it here in Contrary view no. 19. Congratulations! Now how about guaranteed stock market bonds that can wipe the innocent out, or high income schemes that simply consume capital?
Once you stray away from Gilts in a deflationary bear market, you are bound to make losses. Since a deflationary bear market is outside most financial advisers' experience, and no financial adviser dares learn any history, the simplicity of the proposition
somehow escapes the understanding of most experts. So what part of the message still has to get through?
The belief that shares are now cheap is incredibly naive. The recession now unfolding will be quite different to the last one in 1990. Shares recovered after the last two recessions in 1979 and 1990 because people were willing to borrow more. Households are now saturated with debt, so this way out just will not work. Therefore advice to "buy cheaply" is mistaken.
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