My crystal ball sees disappointment ahead

Merryn Somerset Webb doubts that markets will go on rising — and advises us how not to get poorer in 2010

Back in early 2007, an interviewer challenged my stance on the housing market. She pointed out that I had been bearish on the property market for several years but that the market did not seem much interested in my opinion. It wasn’t crashing. And that, she said, suggested that it never would.

This is a pretty dimwitted argument. But it is much used when an asset class is rising for reasons connected to something other than its real value — its very rising is somehow used to justify its rise. Property market-watchers will remember that pre-crash, the most the housing bulls would accept was that there might be a ‘period of consolidation’ while incomes somehow — no one explained how — caught up with prices. And so it is in the stock market today.