Crisis “akin to world war”

It’s not world war, it’s unconditional surrender, says Charles Dumas, the director and head of the world service at Lombard Street Research.

In his daily note, he says that the American stockmarket is relatively cheaper than in all 1,680 months of the past 140 years except 26. These were 17 months between 1920-21, 3 in 1932, 2 in 1942, and 3 in 1982. All apart from the 1982 dates were dominated by world war effects.

Dumas says that the British market is not so historically cheap, but has a positive yield gap for the first time since 1957.

Despite drawing parallels with the wars, Dumas says, “It is not reasonable to compare current problems with the effects of world wars, nor the depression: anybody unaware of this should go back to school and read some proper history, maybe some George Orwell too.

“The great inflation of the 1970s is a reasonable point of comparison, being peacetime, a period of major financial instability and political flux, which boils it down to 1982. Maybe somebody out there wishes they had sold stocks in 1982: this note is not for them.”