There is too much cash chasing too few good shares. Three important factors (and myriad others) have driven this large liquidity support for markets: first, profits have surged in recent years, especially in the UK where the weakness of the British pound has caused international sales and profits to increase when translated back into Sterling. Many companies have accumulated cash on their balance sheets, some of which will be distributed to loyal shareholders via increased dividends or share buy-backs. Second, inequality is increasing since the better-off benefit from rising markets far more than those who are just managing. The former use their wealth to buy yet more financial assets whereas the latter have rent, food and clothing to pay for before anything is left over for discretionary purchases. Third, and most important, central banks have been huge buyers of financial assets which, stating the obvious, has pushed prices for such assets higher and higher.

The result of all this is that, after spending years on the side-lines, retail investors are now coming back into the market-place. Passive investing, i.e. buying funds which track share indices, is, in my opinion, in danger of over-shooting – just because it is popular doesn’t make it right. By contrast, risky hedge funds used to taking huge gambles are struggling to show a decent return because, seemingly, everyone is trying to do exactly the same thing at the same time (i.e. a crowded trade). As a contrarian, these two matters worry me a lot. Over the long term, these three sources of liquidity will probably erode. What we need to replace this source of cash is sensible economic reform to produce sound money and as-near-as-we-can-get to free trade. I see no signs of such policies in the Conservative or Labour manifestos or the Trump tweets. Contrarians amongst Athelney shareholders will be relieved to read that I still believe that there are sufficient bargains in smaller companies out there to keep me going for a while yet.