Cover of MoneyWeek magazine issue no 608

Growing profits

28 September 2012 / Issue 608

The small stocks to back now

PLUS:

  • It really is different this time
  • Could China embark on a financial war with Japan?
  • Six rules for happiness

Excerpt

The shock of the new

Almost everything has some kind of historical precedent. Look quickly at where our economies are today and you might think you see nothing new. After all, countries have been in debt before. Empires have destroyed themselves with money printing before. Bond yields have been low for decades before. And currency unions have collapsed before. But look a little closer and you will see that a good deal of what is happening in the global economy really is unprecedented.

Take interest rates. The UK base rate remains at its lowest level since usable records began in 1694. Then bond yields. A report from Deutsche Bank notes that they are at all-time lows all over the place. In Holland, ten-year yields hit their lowest levels in 495 years back in June.

And short-term yields? These days they are often negative: people are prepared to invest in them even in the certain knowledge that they will make a negative return in both nominal and real (inflation-adjusted) terms.

• Read the full editor’s letter here: The shock of the new.