FIXED INTEREST OR EQUITIES?
Up to a point I agree with this line of reasoning and in any event it merely reinforces a view I have often expressed in these notes, namely, that the investor who is not precluded from venturing outside the trustee field should leaven his portfolio with ordinary shares of the less speculative type. That is merely a commonsense measure to safeguard one's position against the ravages mild or severe, of inflation. On the other hand, I see nothing in the present situation to indicate the need for any wholesale movement out of fixed interest stocks. If, as may be hoped, the European political clouds lift, I should expect a substantial recovery in gilt- edged prices despite the huge burden of defence expenditure. If, on the other hand, the worst happens, in so far as invest- ments will be of importance at all, the scales would be tipped in favour of equities. On the remaining hypothesis, that we are to continue in the present state of "white war," while gilt-edged will probably find lower levels, the process should be gradual and it is hard to see how equities as a who"e could command enough speculative support to bring a sustained upward movement. Influences there undoubtedly would be making for an expansion of the credit base but I do not envisage any really formidable inflation in this country. Both in Threadneedle Street and Whitehall powerful efforts would be made to prevent any serious rise in prices or in money rates.
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