Greetham also explained that in each of the last few short economic cycles we have needed to see a deep sense of panic before policy makers have been jolted into action. So far though, he would say that we've seen "their second best shots." Fidelity's Head of Asset Allocation noted that with the bank's market sentiment indicator in neutral territory, "things may have to get worse before we get additional and potentially cycle-turning policy action."
"Thinking longer term, this rapid boom-bust environment poses serious challenges for investors," he said, "diversification across asset classes is more important than ever and the asset mix should include safe-haven or uncorrelated investments like high quality sovereign bonds and gold."
"A wide dispersion of returns offers fertile ground for tactical strategies but it is important that decisions extend beyond what has become a binary call on risk," Greetham concluded.