The past few years have seen a strong recovery in real estate, and stock and bond markets have had a great run. For investors, there’s been a lot to celebrate.
But there’s also plenty of reason for caution. After years of artificially low interest rates, thanks to the world’s central bankers, most asset classes are priced for perfection, and dividend and bond yields are at historic lows. The Fed now looks set to raise interest rates in 2015, and increasing challenges in the Eurozone and geo political risk in the Middle East and the Crimea are creating more uncertainty. Oil prices have dropped by half, which is good, but this introduces volatility into a huge part of the economy. Meanwhile, emerging markets are in turmoil.
It’s worth asking: do the world’s central bankers really know what they’re doing? Even professional investors find this to be a brutal market to navigate. It feels like a perilous time for the preservation of capital.
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