In August the average prudential balanced portfolio returned 1.58% (July: 2.70%). Top performer is Allan Gray (2.31%), Prudential Namibia Managed (1.11%) takes the bottom spot.

Ardent followers of our newsletter, and more specifically our comments on the world of investments will be forgiven for their conclusion that the 'fiscal easing measures' of the US Fed must be our pet topic. It's not really though, however, it probably is the one intervention by a global regulator that currently has the biggest impact on global financial markets. How does this now gel with the principle of the free market mechanism? Are we acknowledging that the free market philosophy is a relic of the past?

Fact of the matter is that players in global financial markets, and investors, are in the hands of the Fed and if you have any inside information about the next moves of the Fed you can become very rich in a very short time, obviously at the expense of someone else, those that do not have inside information.

We have seen the violent negative reaction of markets when Ben Bernanke indicated that the Fed was contemplating to taper its massive bond buying programme and we have seen the exuberance following the latest meeting of the Fed where Ben Bernanke announced that the Fed will continue with its asset purchase programme for a while.

So for the next couple of months it could still be a matter of making hay while the sun shines for the aggressive equity investors. As James Downie once observed, "in a hurricane even turkeys can fly", and this is likely to be the case even with the turkeys amongst equities while this hurricane lasts.

For pension fund investments this is unfortunately not a conducive environment because they have to be focused on the long-term and in the long-term, everything that goes up will come down and every bubble will burst some time or other.

To protect pension fund assets against the negative impact of the bursting of a bubble, the investor needs to know what assets represents a bubble. A more speculative investor (or growth/momentum investor) would still attempt to ride the bubble and to get off just in time while a conservative investor (or value investor) would rather try to avoid investing in a bubble. We certainly are proponents of the latter and this should be borne in mind by our readers when considering when, how and where to invest.

So with this background, we know that interest rates will remain low and equity will continue to be carried in the storm, but we do not know for how much longer this will continue. It is unlikely though that the Fed will consciously do serious harm to global financial markets, so it is likely to taper in initially small, later increasing steps, depending on how markets respond.