Three Scenarios: Doomsday, Limbo or Revival

Until last week I'd never been in the The Galerie Doree but if you ever get the chance it's well worth a peek. Situated inside what is now the the Banque de France but was once the Hotel de Toulouse, it equals anything in Versailles with a French version of the Sistine chapel on top.

Mind you, during the revolution they didn't think too much of it, the room was used to store paper. Anyway, there I was after lunch with the central bank governor, gazing through this beautiful room, when I was struck by the thought that we'd all better get used to much lower returns from our investments.

Now, admittedly, it wasn't the artistic beauty in front of me that inspired this conclusion; I was rather helped by the speakers on my investment panel at the GIC conference.

Martin Barnes from BCA laid out three basic macro views: Doomsday, Limbo and Revival. Happily for the digestion, Martin was in the revival camp, which made my Fois Gras sit rather more comfortably.

Unhappily, he said that even with the best global economic conditions he could foresee, a balanced equity portfolio that excluded banks was unlikely to yield much more than 6 percent in annualized gains. With banks, we'd be toast.

From there it got worse. Martin Jetzer from Bellecapital told us clients are now much more interested in return of investment than return on investment and was fearful of the huge demographic challenges that face us in the West.

John Mauldin writes an investment letter, "Thoughts from the Frontline". He tells me it's read by over 1.5 million people. I can only say they must be suckers for punishment. John is universally bearish and convinced we're heading for a double dip recession in both the US and Europe.

His reasoning: on top of all the spending cuts, huge rising taxation will push us over the edge. The answer: invest in traders or, in other words, hedge funds. There is a problem with that. He reckons only 20 percent of them are going to make any money, and even the good ones might only return high single digits.

As for private equity funds, buyer beware. Andrew Boyle from London and Capital says many of the big players are holed below the water line. Investors have to be very wary they're not investing in new funds that are purely designed to earn fees to bail out existing investments that have gone bad.

Perhaps like all of us, private equity funds can only make money by going back to fundamentals and creating wealth by supporting entrepreneurial activity.

Coming back on a packed Eurostar, I realized, if I hadn't know before, we really are in the world of the single digit return and likely to stay here for quite some time. As a result I've been to my local bookie and gone for the win double with Murray and England. I can't lose!!