The theory is that there is a limited supply of most types of assets, at least those that would be difficult to replace. Assuming that there is in place a global economic expansion, it is only a matter of time before all the assets are used up and incremental demand will then drive up prices rapidly. We have all seen bubbles. Many say that there is a bubble in the current real estate boom in such countries as Australia and China, which have powered through the economic recession and never had a down year. What is clear is that we now have an opportunity to buy many assets at reasonable valuations due to concern of a double dip in the economy, unsustainable government debts, and a devolving economy as increased unemployment drives reduced demand.
We think that there is now a great opportunity to buy assets, and a good asset allocation policy will help protect against the vagaries of the markets and economies.