The most dangerous investment idea today

The 'yield gap' is an idea that has a long and happy history of predicting when stock markets are undervalued. But the rules of the game have changed, says Bengt Saelensminde. Here, he explains why.

"I am betting on the stock market rising substantially." That's from a Telegraph article I've just read. Read it here. According to James Bartholomew, a reliable old City indicator is suddenly signalling that stocks are now grossly undervalued. And in fact they could be about to double.

Sounds crazy, doesn't it? That's because it is. Mr Bartholomew has made a fatal error. He doesn't realise that the rules of the game have changed. That we are entering a new era for investing - a deflationary environment where everything that we know is turned on its head.

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Bengt graduated from Reading University in 1994 and followed up with a master's degree in business economics.

 

He started stock market investing at the age of 13, and this eventually led to a job in the City of London in 1995. He started on a bond desk at Cantor Fitzgerald and ended up running a desk at stockbroker's Cazenove.

 

Bengt left the City in 2000 to start up his own import and beauty products business which he still runs today.