Cover of MoneyWeek magazine issue no 493

Harvesting profits

2 July 2010 / Issue 493

Three agricultural stocks to buy now

PLUS:

  • This health stock is set to soar
  • Finding shares you'll never want to sell
  • How I built a £300m fortune on ice cream

Excerpt

A question of faith

The bubble that led up to the collapse of 2008 was based on unusually high levels of trust across the financial system. Investors trusted banks. Banks trusted each other. Everyone trusted the ratings agencies. If all this trust hadn’t existed, there is no way that so many stupidly complicated and gener-ally worthless securities could have flooded, and all but destroyed, the credit markets.

That trust didn’t disappear with the credit crunch. Instead, investors transferred their faith to their governments. The stockmarket rally since early 2009 has been based on the firm belief that govern-ments can both take on the debt of the private sector and kick their economies back into action at the same time.

We should be glad that investors found that faith – imagine what would have happened had the fear of 2008 poured into 2009 and beyond. But it leaves us in a tough situation now. Why? Because there is no back stop to governments. I shared a speaking platform with the FT’s Gillian Tett at a City lunch last week and the question we both posed – in slightly different ways – was what happens next: what happens if we lose our faith in governments to sort out the mess they somehow allowed us to get into?

• Read the full editor’s letter here:
A question of faith

Also in this week’s magazine

Editor’s letter: A question of faith
News: China and Taiwan sign trade pact
News: Growth scare rattles markets
News: Will BP really be taken over?
Markets: US stocks set to hit the skids
Markets: Russian stocks are cheap – and will stay that way
Sector: Bag big pharma while it’s out of favour
Gamble of the week: A probiotic gem
Share tip of the week: IT outsourcer in pole position
Turkey of the week: vulnerable hotelier
Strategy: The shares you’ll never want to sell
Personal view: Three solid American stocks
Briefing: Has peak oil theory passed its peak?
Personal finance: Switch Isas for a better rate
Tax advice of the week: Buy agricultural property
Funds: How to profit from the deflation scare
Cover story: Harvest profits from agricultural growth
Fund of the week: Big gains from small caps
Entrepreneur: Duncan Bannatyne: £300m TV dragon
Travel: Where to stay in Seville
Toys: Skoda’s sporty yet practical estate
Wine: The perfect Pinot for a summer lunch party
Last word: Bill Bonner: Who pays?