Economic prosperity out of reach

Low inflation, strong economic growth and strong equity markets. This Holy Grail of prosperity, which seemed within grasp during the first quarter of 2000, faded away through the remainder of the year. The S&P 500 fell 13.2% and the Nasdaq 42.5%. Economic growth, which peaked at the end of the second quarter, is now trending lower with economists expecting a significant slowdown. The only good news is that inflationary pressures appear to be receding, but even this is threatened by high energy costs. Subtle and not so subtle shifts in investor behaviour developed during the past year. A...