Over the past few months, I have repeatedly pointed out that the current rise in interest rates, which we are seeing almost everywhere in the world - China is an exception - will not go so far as to reach the inflation rate. Accordingly, bonds will not be a real alternative to equities in the future either. But should you really be investing in equities right now?

You are rightly wondering whether it is the best recommendation to enter an asset class just because other investment opportunities are even less attractive. I can reassure you: There are a number of indicators that suggest high returns can be expected from equities over the next twelve months.

A somewhat paradoxical indicator: the current pessimism among fund managers. In May, they held more cash than at any time since the terrorist attack on the World Trade Center in 2001 (6.2% of fund assets according to a Bank of America survey). And it is precisely this high proportion of cash that points to high price gains in the coming months.

Let's take a look at the situation in 2001: Even if you include the first two months of high cash ratios at the beginning of the New Market crash from March 2000, you could achieve an average price gain of 8.9 percent in the following twelve months. If the high cash ratios had only been used as a buy signal from September 2001, when the stock markets left the overvaluation zone for the first time, the average price gain after one year would have been 14.2%. Compared to the average price increase of the global stock market (2.7% per year since December 1999), high cash ratios were therefore a good time for fund managers to enter the market.

As a number of other developments that are currently depressing share prices - rising interest rates, rising container freight costs, rising oil prices - also appear to have peaked, our long-term earnings expectations for equities have risen significantly.

‍

‍