So Standard Life has sold a further £7.5bn of equities to reduce its long-term investment funds under the with-profits arena to only 35 per cent of assets.
When will everyone realise that this action is pathetic? Equities must constitute a greater proportion of longer-term investment funds, especially when the alternatives (gilts and corporate bonds) have been at their most expensive for up to 50 years not too long ago.
People need to return to the basics. If people do not believe the principles of equity investment, then how on earth do they think the Government will be funded?
Successful, growing economies and a buoyant commerce sector are now imperative to maintain funding and the combination provided by equity, borrowed funds, employment and human initiative are the ingredients which create returns in excess of interest alone.
I am not naive but I do try to buy investments when they are cheap and sell them when they are dear but, sadly, my confidence in regulation and the institutions thus governing solvency encourages me to imagine that proportionate exposure to equities will be allowed to increase to much greater amounts after the majority of the recovery from recent lows has taken place. Why might that happen? Because, of course, the returns from equities would have settled to a higher (normal) plane and so a greater ongoing return would be more acceptable in the solvency model.
Still, as an independent investment manager, I suppose I should revel in these situations because the best opportunities for investment are always created through such dumbing down.
Perhaps that is why in 2003 we enjoyed our best absolute and comparative performance for our clients since the firm was established in 1985.
Philip Milton Philip J Milton & Company,Barnstaple, North Devon