Environment demands investors take a more flexible approach

The road to economic normality is likely to be long and bumpy. Although purchasing managers are ordering again, industrial production is still down on a year ago.

Also, consumer confidence, although higher than the dark days of March, is still significantly lower than normal levels, as consumers continue to face stagnant income growth, high and rising unemployment. Slowly but surely financial and economic conditions will continue to improve and economic activity will eventually return to trend levels. But the chances are the new trend will be lower than in previous times. Government debt as a percentage of GDP is likely to escalate from an average of approximately 75% to an average of 150% in a worst-case scenario. Massive government spending i...