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The Masked Tulip

Compellingly Lost

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Sir, The Lex column on March 9 has me confused. UK house prices and US equities are both within touching distance of their previous record levels after strong rallies.

The S&P 500 is 50 per cent overvalued compared to history, but valuations are “neither compelling nor frightening”. On the other hand, London house prices are 30 per cent overvalued, but “the fundamentals still point to a big drop in prices”.

I am long on both asset classes at the moment: what should I do?

Christo Leventis,


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One is backed by healthy corporate balance sheets, laden with cash, and the other is backed by....

Share prices are determined by the market between sellers of shares (old people retiring and liquidating their pension pots) and buyers of shares (younger people building up their pension pots). If young people have no money to buy shares off the old, the price will fall.

In the long run, the underlying health of individual listed companies is secondary to the intergenerational exchange of assets. The wealth/income gap between the older and younger generations has almost never been wider than it is now. That is bearish for equities.

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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