I have been warning of the dangers ahead for the economy and global equity markets. As I write this markets are soaring from their lows in March of this year. In fact the main US and UK indexes have increased by over 50%. Companies are reporting reasonable earnings and everything seems to be on the up.

This is the time where things get interesting. For those of us who are bearish about 2010 it becomes slightly uncomfortable as markets do so well. However in all financial planning you have to look at your investment time frame, what will the situation be in one, five or ten years.

Traditionally equities have out performed other asset classes over time and I believe this will still be the case over the long term so it is right to hold equities, but in the very short term (2010 – 2012) we may see a significant fall in markets and it would be prudent to miss this dip to await what will be a great buying opportunity.

If you listen to the markets and the politicians everything is on the up and as we predicted this has to some extent been due to the large fiscal stimulus provided by the US and UK governments. What happens after the money is gone, I fear a reality check!

Neil Wood ford is one of the most successful UK fund managers and his track record over two decades is exemplary. He states “the market has risen again on a false premise “. Time will tell who is correct.

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