What assets have avoided the worldwide bear market? Or, put another way, how has the smart money been looking after itself in the past five years? One thing is for sure: many of the alternative investments that were being punted in the 1980s and early 1990s have proved just as disastrous as traditional equities.
Take the art market. Some of the Van Goghs, Renoirs and other Impressionist masterpieces that were being snapped up at auction by (especially) Japanese buyers will take literally decades to regain their bubble values. Indeed, it's to be hoped that they have all survived: some have never been seen since they were carted off from the Christie's and Sotheby's sale rooms. And while it's to be hoped that they are safe in an underground bank vault, as doubtful security for loans, there have been rumours that one or two have been deliberately destroyed.
Vintage wine, Krugerrands, ostrich farms and other much-touted potential Eldorados have proved equally fallible, in many cases helped on their sorry way by crooked promoters who compounded their wild promises of profit by selling the same item over and over again. After all, one ostrich looks very like another (except, perhaps, to another ostrich), and there have been several reports of wine cellars that were sadly lacking in bottles when "investors" tried to reclaim their assets.
Even the apparently safest propositions - like taking a position on the inexorable weakness of the rand - have turned out to be unexpectedly risky. At least gold bullion has held up relatively well, just remember that it's 20 years since the price peaked - at double the present level.
Of course, it's still possible to draw up charts showing that in any given 10-year period (or whatever) equities have outperformed inflation and given the best return, ever since Adam pondered on how to reinvest the proceeds of his apple orchard. No doubt that's true in the long term, but as the great Lord Keynes put it, in the long run we're all dead.
But not all trends persist for ever, and with more and more economists warning that the greatest danger the world economy faces now is a combination of deflation (that is, falling prices) and slow growth, it would be folly to assume that what we have been through is just a blip in the long-term trend.
Indeed, as one would expect at such a time, the best performer in recent years in most markets has been boring old bonds. Not many years ago you could have got a "safe" but boring 5% or so in US Federal funds; the effective yield now is 1,23%. Similarly, only a few years ago you could have got 8,5% or so on UK gilts; they are now yielding barely 4%.
The capital gains from that sort of interest decline are mouthwatering, and certainly better than any international equity market and virtually any other investment - unless, of course, you're the Oppenheimers buying back a large chunk of your favourite company, De Beers, and taking it private.
But then, if you're the Oppenheimers, you're probably not too worried about short-term stock exchange fluctuations or the yield on US Fed funds.
