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He told Citywire Selection: ‘Markets are complacent about the risks and people don’t really think about the negatives.
He concedes that there are signs that economic activity is picking up, but says that any improvement in developed world economies remains ‘dwarfed by the huge problems of debt and the unresolved issues that arise from that.’
With that cautious mind-set, Brooke is keeping his cash reserves high at around 7%, although the perennially defensive Brooke concedes that the overall economic backdrop is getting better.
‘There’s no question that things do look better, particularly in equity markets but how much of that is the distortion of quantitative easing and how much of it is an indicator of genuine improving economic growth?
‘June was a reminder of what happens to markets if the stimulus is going to be withdrawn and how damaging to investor confidence that will be’.
Brooke is a long term holder of Vodafone and believes that the disposal of its minority stake in Verizon is payback for keeping faith with the company.
‘This is a classic reward for the patient investor as the transaction confounded the many commentators that said it couldn’t be done’.
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