We view the investible world through four asset class prisms: high quality debt; high quality equity; absolute return funds; and real assets. Three of these four types can be owned 'passively'; absolute return funds, on the other hand, are not a formal asset class as such, and positively require some form of active management. In the unrealistic circumstance of being forced at gunpoint to choose one and one only of these assets to hold for the foreseeable future, high quality equities, absolute return funds and real assets (notably gold and silver as "natural money") would all pass muster to a greater or lesser extent - but the exercise is in any case wholly artificial. On the matter of broader equity market valuations, we have no strong convictions - as always, we will stick to what we consider to be defensive high quality. But since the monetary authorities seem determined to print and debauch their way back to what they presume to be growth and wealth, that leaves a pretty serious question mark over having the entirety of one's investments concentrated in the form of bonds - or in the currencies in which those bonds are denominated. As the last week's price action in the largest (poorest quality) government bond markets would tend to suggest ("US stimulus sparks government bond sell-off" as the FT put it), investors in government bond markets like those of the US, the UK and even Germany may be in for a rude though not entirely unforeseen awakening.

David Fuller's view This conclusion will be a familiar theme for most Fullermoney subscribers.