Published by Kauders Portfolio Management, Authorised and regulated by the Financial Services Authority
Return to home page of contrary view or return to complete index
For information about our advice and services visit our main site
The reports of a recession in services continue to mount. Since only the consumer has been keeping us out of recession and consumption largely equals services, it follows that the recessionary forces must continue to grow.
Notice how the latest cut in interest rates was a one day wonder, and sagging share prices are back again. Lower share prices and lower interest rates were the norm in Japan throughout the nineties; they are now spreading to the West. We expect City analysts to discover that this is the norm in another two or three years. Received wisdom about buying shares to combat lower interest rates is likely to prove seriously misconceived.
Received wisdom is wrong, in our view, on another front. As recession develops so apologists refer to the "misery index" of inflation plus unemployment rates. But that concept dates from the inflationary recession of 20 years ago. In a deflationary recession, which is what we face now, the misery index is wrong.
Equity diehards love to grab at straws to "prove" their case. Lower interest rates and the misery index are two examples of where the wrong conclusions result for those who are unable to grasp the principle that the long term trends are changing.
You are welcome to quote or re-use this material, provided you acknowledge the source "www.contraryview.co.uk, published by Kauders Portfolio Management".
Return to home page of contrary view or return to complete index
For information about our advice and services visit our main site or click for contact details
WARNING: The firm can only be responsible for action taken on our advice given personally and specifically to be suitable for each individual. Statements on this site do not, on their own, constitute advice. Please note that UK regulatory requirements prevent us commenting on your existing investments or giving specific advice, unless you first sign one of our portfolio service agreements.
This advertisement has been approved by Kauders Portfolio Management, who are authorised and regulated by the Financial Services Authority in the conduct of investment business in the UK. Opinions and statistics are valid at time of publication but may differ later. We leave them on the site so that you can see how useful our point of view has been.
© Kauders Portfolio Management 2001