If you are looking for a market bubble do not look to emerging markets. The US and Europe remain a huge super-bubble. Emerging markets, by contrast, are safe. Putting one’s head in the sand and denying this reality has the attraction of plentiful company, but constitutes the opposite of prudence. Remember, lemmings also like to crowd together and the collective name for them is a “suicide”.

Unlike Europe and the US, emerging markets do not have a credit crunch, in essence a multi-year, very painful, de-leveraging – that is, wealth destruction. But if you have not experienced 30 years of rising financial leverage, the past 10 to excess, you cannot get a credit crunch. Emerging markets are in a very different cycle to the developed world now, with inflationary not deflationary pressures.

The above comments will appear outrageous to some no doubt, just as my musing some years ago in a London club that Russian sovereign debt was a better credit than General Motors caused consternation to the listening ear of a nearby gentleman (subsequently a friend and convert). Prejudice is a powerful adversary for emerging markets, but also gives us a clue as to how allocation will shift only gradually to a more rational and prudent shape.