When I first started out on the bond markets, an older and wiser colleague took it upon himself to warn me of the pitfalls of dealing with unscrupulous brokers. “Watch out for salesmen selling recovery stories,” he advised. “Never forget the definition of a bond that was down 50 per cent and then recovered 50 per cent. It’s a bond that has lost 25 per cent.” I can’t help thinking of this homely piece of wisdom every time I read another story about the UK’s loudly hailed recent recovery.
It is true that the UK’s gross domestic product (GDP) grew by nearly 2 per cent in the four quarters to September 2013, compared to barely more than 1 per cent over the whole two years before that.
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