More than 100 Isle of Man business leaders were given a detailed insight into the true global economic position at a breakfast briefing organised by Ramsey Crookall.
Respected financial journalist Merryn Somerset Webb addressed the briefing at the Mount Murray Hotel, offering her assessment of what the future holds for investments, inflation and growth.
The Editor-in-Chief of MoneyWeek, the UK’s best-selling financial magazine, explained how the policy of Quantitative Easing had resulted in inflated asset values, making the wealthy even richer and widening the social divide. Merryn said this had already caused social inequality and may lead to extreme social conditions in the long term, as money is not being invested into the innovations which will drive true economic growth which will benefit all.
She also added that the inflated asset values and the benefits of the reported economic recovery were not being shared by all. Contrary to the low official inflation data, prices in essentials like utilities and transport were rising much faster and in some cases 25% higher than at the start of the financial crisis.
Merryn warned asset values will dramatically fall once QE enters its adjustment phase, adding the Bank of England had warned what the impact of QE would be, but that advice had gone largely unheeded.
Her briefing also discussed how the lack of cash being lent had led to the growth of social financing, known as crowd funding, which showed that however policy tries to direct or stem the flow of money, it will find a way to where it is needed or wanted.
Merryn closed by offering her advice on where to invest and, importantly, where to avoid. She highlighted the ‘manipulated market’ in the United States as one not to invest in, warning valuations were far too high, driven by QE, favourable taxation and results-driven bonuses for executives. She said the values could not be sustained in the long term, and things are already changing, which will bring prices down.
She surprised many when she recommended investors look East instead and consider investing in Russia. It is deemed by many to be too risky, due to social and political instability, but Merryn said stock prices were discounting the risk and even discounting a return to communism. This means the possibility of a good return over 10 years was much higher in Russia than the US.
Finally, she confirmed that gold should be a significant part of everyone’s investment portfolio.
During the briefing, Ramsey Crookall CEO Joanna Crookall also revealed that the firm had spent much of the past 12 months developing new digital systems to benefit clients. As part of its ambition to stay at the forefront of technology as well as delivering a world-class personal service, Ramsey Crookall has developed an online portal through its website which allows clients to view their portfolios and trading history. Importantly, the firm has also developed an App which will allow clients to access their portfolios on the go with a mobile device, such as Smart Phone or Tablet.
The App will soon be available to download, for free, from Google Play and the Appel App Store.
Joanna also thanked Merryn for her briefing.
She added afterwards: ‘Merryn is a widely respected and tremendously experience financial expert, so this was a valuable opportunity to hear her view on what is really happening with investment markets and, vitally what the future holds.
‘She provided a thought-provoking and interesting briefing letting our audience share her views on the issues which affect us all. I’d like to thank Merryn and all our guests for attending.’