Coronavirus was the catalyst for the market turmoil, but it was the pathology of the financial world, and its interaction with the markets – not a prediction of a pandemic – which gave us our dispositions. The sharp falls, and the buoyancy of the recovery, follow a sequence with which we have become familiar. Thus far, it has been accompanied by satisfactory short-term performance. But in the battle to protect portfolios, the next phase, and beyond, also need to play out according to plan. Our philosophy is never to aim to be precisely right, but, rather, always to be ‘not wrong’. Ruffer portfolios therefore hold a multitude of investments, a good number of which should do well even if the views expressed in this review turn out to be wonky.

First, why have the markets recovered? The classically correct answer is that interest rates have come down, both at short and long duration – future profits in the stockmarket are discounted at a lower rate than before; they are therefore worth more than they were. This, of course, seems to assume that the profits will reappear, and much chalk on banana skin has been expended to predict what those future profits will look like. But Pavlov and his dogs have as much, and probably more, to say than the chalk bearers. As an ichthyosauric investor I’m partial to repetition, and the repetition here – of a point from my previous review in April – concerns the game changer of the late 1980s. Alan Greenspan, chair of the US Federal Reserve, began the policy of supplying the market with funds whenever it had a headache. It is a policy executed over three decades without even a pause for a coffee break. The first iteration was after the 1987 stockmarket crash – it took two years for the markets to throw off the fear that it had been a 1929 moment. Since then, investors have come to see that bad news is the precursor of Fed-gifted good news – and only the patsies sell the bad news. The hardwiring of almost all investors active today was forged by events subsequent to October 1987. You probably need to have been running money from before the start of the long bull market in 1982 to know how markets operate without medication. For a longish while now, the prevailing wind has been one where everyone knows you don’t sell on bad news. Yet one day the wind will change, and bad news in the real world will be bad news for asset values once more.