CITY AND SUBURBAN
Sid needs the Belgian dental treatment it's time he was in bonds
CHRISTOPHER FILDES
Belgian dentists relax in their chairs, while bond salesmen lean over their wallets and make painless extractions. 'Open wide,' they say. Over here, Sid needs the same treatment. On the Continent there is a vast bond market which thinks of the Belgian dentist as its ultimate customer, but our Sid goes in for shares. He has bought them in the privatisation sales. He does not own bonds and may not have heard of them — though he has heard of the companies which ought to be bidding for his money. He and they are missing a great opportuni- ty. Both have got things the wrong way round. I want Sid to own shares, so long as he realises that in any company sharehold- ers carry the ultimate risk — just as they stand to gain the ultimate reward. Bond- holders, with their fixed incomes, limit both their reward and their risk. That is a sensi- ble way to start investing. It will be more sensible if financial markets now become more stable, with bonds standing to gain from low inflation, and shareholders' divi- dends growing more slowly as companies put their finances in order. Barclays de Zoete Wedd says so in its annual study: The risk element in shares will become more important, and it will become appar- ent that bonds offer a secure real yield, as they have already in the late 1980s.'
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