I forget who originally coined the phrase that you should never trust the broker who says “this time is different” but I am beginning to wonder if he might at last be proved wrong.
“This time” is feeling particularly tricky. A great deal of perceived wisdom is going out of the window. Take, as an example, the belief that rising inflation demands higher interest rates. Not, it appears, if economic activity is weak, it doesn’t.
And how about devaluation being good for manufacturing industry? The latest figures produced for the UK suggest that, despite a weak currency, we are still finding it difficult to make and sell goods abroad.
As for the developing world hauling us out of recession, I have read more alarming things about China in the past week than I care to think about. It no longer feels as though what has gone before will necessarily come round again any time soon.
As it happens, we have been there before, but not in my experience. For the first three-quarters of my near half-century of life in the investment business, I became used to markets that generally rose. True, we had bear as well as bull markets but overall the trend was up.
However, in the past there have been times when the return from equities – perceived as the best long-term home for investment capital – has remained poor for a prolonged period.
It seems as though we may be going through just one of these periods now. Look back 15 years and you will see that the FTSE 100 has fluctuated between the mid 3,000s and the high 6,000s, making money at times but not demonstrating a convincing upward trend.
In the very short term, we seem to be locked into a very narrow trading range. My belief has been that the natural breakout will be up. I hope I am right but am beginning to wonder.
So what is different this time?
A great deal, if you care to think about it. For a start, investment management is now a professional, competitive business, one where advantage is hard to secure.
Moreover, while the vagaries of stock prices affected only a wealthy few in the distant past, today, all our fortunes are tied up in the performance of the market to some measure. There are, it has to be said, few other games in town these days.
Finally, the demographic issues are only just being talked about in a serious fashion.
In the past, I have remarked that the inequalities between government pension arrangements and those available in the private sector are likely to lead to significant problems in the future but only now are the true costs being discussed in a semi-open manner.
Inevitably, those with gold-plated pension protection are unwilling to surrender their position. And who can blame them – except that it is all of us who will have to bear the costs involved.
But it is not just pensions where living longer is upsetting the financial apple cart. The debate over the future of the National Health Service has at its core the shifting age profile of the population.
What was put in place more than 60 years ago may simply not work under current social and economic conditions. Whether or not more private sector involvement is desirable, the fact remains that this time it is different.
Quite what this might mean for markets is less clear. Perhaps I will have a better feel for things when next I grace this column. By the time this reaches your office desk I will have had the benefit of participating in two conferences – one with a private investor audience – one with IFAs. There will be plenty of fund managers there too.
I shall be listening carefully for what has changed and what might still be the same.
Brian Tora is an associate with investment managers JM Finn & Co