“There is always a danger in saying ‘this time it is different’, because 99 times out of 100 it turns out not to be different,” he says. “But then there is that one time that it is. Unfortunately, like most things, it is usually not clear until well after the event. “If it is different, then you don’t have history to help you. The nature of advice you can give has to be more qualitative in nature. There are conditions in the 1920s and 30s where you could draw parallels to today, but it is never perfect.”

Unger says the extent to which other industries are going to be affected is not obvious, and it is not clear where the value is. “So far, what we have seen has been largely a financial markets response. We are yet to see the flow-on effects for the economy.”

Taking an opposing view is Geoff Warren, director of capital market research at Russell, who says he couldn’t disagree more with funds not maintaining their equities allocation. “In fact, I think this is exactly the sort of time you should be rebalancing your portfolio,” Warren says.

“Markets have become uncertain about the future, and there are a lot of risks out there. So markets have repriced in a way that you end up with low returns for safe assets, meanwhile the risk premium is now very high for accepting the uncertainty that comes with risky assets.” Warren doubts that those investors still stockpiling cash have a strong justification for taking that view.

“Their answer will be something like: ‘there is uncertainty and the world has changed’, but we don’t really know that. I think you should go back to your default position when you lack strong evidence that your default position is wrong. “On top of that, I would argue that if you were going to vary from your default position, the returns on risk have gone up and you should hold more risk exposure rather than less. If anything I would be overweight equities.”

The Russell researcher says that if one was to build a bearish argument for equities from here, one would have to believe in some sort of permanent downshift in corporate profitability. “The market tends to front run the economy, and it has been pricing for a disaster. I do expect there to be a downturn in profits, but that is now priced into the market, and the question you have got to ask yourself is: ‘is there a scenario out there now that could be worse than the market is anticipating?’ That is possible, but the more it goes down the more remote that possibility becomes.”

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