A flight to cash

05th February 2015

Is now the time to consider how to manage your savings more effectively?

We noted with interest that a renowned City expert is urging caution about the stock market. Crispin Odey, the founder of London-based Odey Asset Management, one of the UK’s most successful hedge fund managers has warned, in a letter to clients, that he expects major economies to enter a recession that will “devastate” stock markets that will be “remembered in a hundred years”.

The warning by Mr Odey is based on his belief that the European Central Bank’s bond-buying programme, announced recently, will disappoint markets and will not stave off a slump.

Crispin Odey is well known for his prediction of the credit crunch in 2008 and runs a very successful Hedge Fund, which profited from the shorting of bank shares.

He concluded in his letter: “We are in the first stage of this downturn. It is too early to see what will happen - a change of this magnitude means the darkness and mist is very great. This down cycle is likely to be remembered in a hundred years.”

Warning that central banks have run out of financial firepower, he added: “We used all our monetary firepower to avoid the first downturn in 2007-09, so we are really at a dangerous point. If economic activity far from picks up, but falters, then there will be a painful round of debt default.”

He pointed to slowing growth in China alongside falling commodity prices and incomes in emerging markets. “The shorting opportunity looks as great as it was in 07/09.”

Mr Odey also predicts that markets will be more greatly influenced by politics this year. “This time around the problem we have as well is that politics will start to rear its head and we are left to deal with politicians who are increasingly critical of the capitalist system’s ability to allocate capital”.

Savings Champion is not in a position to comment specifically in relation to any form of prediction of the stock market. However warnings of this type are often a useful prompt to ensure financial affairs are in order, which will include ensuring cash savings benefit from the maximum Financial Services Compensation Scheme (FSCS) protection and achieve the best rate of return the market has to offer depending upon your requirements and need to access funds.

If you are unsure whether you could make improvements to your savings accounts then please feel free to call our Bath office on 0800 321 3581.

Contact Us