How to invest your cash this autumn

Being the harbinger of doom is seldom a popular role to play. Nobody likes to be the bearer of bad news, and in Roman times the tradition was to execute such messengers.

So this column is talking about the advice proffered by other messengers rather than trying to get in the line of fire. For the duality of the investment community right now is a talking point in itself. If ever there was a case of talking one thing while doing the reverse now is the time.

You will find plenty of official support for investment in mutual funds among the major banks. The argument would be that if a storm occurred in global financial markets then stocks would bounce back later.

However, this misses the very obvious point that you would be far better off waiting until global markets fell, and then buying your mutual fund as the bounce back would give you a much higher gain. But let's back track, why are many investment professionals gloomy in private about the market outlook?

US interest rates have been rising for almost a year, and are still heading up. This is not generally good news for equities or real estate. And yet equities have drifted sideways and real estate has continued to rocket upwards.

Partly this is down to a 'conundrum' of short-term interest rate hikes failing to raise long-term rates. But we are close to a point where short-term rates overtake long-term rates - the technical term is inversion, and since the 1950s this has always signaled a recession in the US economy.

In that case why does the US economy seem to be doing so well, and profits heading upwards? The housing boom is the short answer. Once this comes to an end, and higher interest rates generally do eventually rebalance real estate markets, then the US economy will run out of steam big time.

With house prices already looking very stretched in terms of valuations this Day of Reckoning can not be far away. And when US markets catch up with reality then we are facing a major global financial crisis that will ripple out around the world affecting almost all investment classes.

So what do you do if you have money sitting idle? Well, count yourself lucky and look for a high interest deposit account. Citibank UAE has just launched a 5% time deposit account which looks attractive, or you might consider buying some gold or silver as an alternative in case the US dollar crashes.

The more adventurous could buy the VIX Index as suggested by Dr. Marc Faber in his latest column on this website. His advice has been very good in the past.