Back in 2000 when global financial markets became similarly overvalued to where they are today, I remember talking to one of Dubai’s wisest independent financial advisers about where people should be putting there money.
"How much longer can I ask clients to pay me a fee for telling them to keep their money in a bank account," he said. "The only thing I can come up with for the more adventurous is to buy some gold or gold shares."
It proved to be sage advice. Those who held cash could buy shares at low prices after the global stock market rout that began with the dot-com crash and ended on the eve of the Second Gulf War in March 2003.
I was a little early in becoming one of the first expatriate buyers of Dubai property in late 2002, but after a nervous year or so local house prices also bottomed out, and that proved to be the very best time to buy before the six-year boom really got going.
Of course, gold buyers in 2000 did much better. Gold was trading around $300 an ounce that year and rose to $1,923 in 2011. Even at today’s price the yellow metal has actually outperformed the S&P 500’s spectacular run since 2003.
Those who bought US treasuries as the stock market boom topped in 2000 also made a excellent return because interest rates fell heavily afterwards, and bond prices are inversely related to interest rates.
So, are we facing a similar scenario this year?
History never repeats exactly but it does rhyme, to misquote Mark Twain. Historic parallels can also be very misleading. But the recent past is the often the best guide to the impending future.
Indeed, you don’t have to look back more than a few weeks at the moment to see the red flags flying. Dr Copper is sick: falling copper prices are a reliable recession indicator.
The Australian dollar has gone down the pan: the economy with the most exposure to Chinese trade is telling us something bad about the growing US-China trade war.
Brexit blues have knocked house prices in every London borough bar two, and the spillover effect of Britain’s drawn-out departure from the European Union is weakening the economy of the whole continent, and sending the US dollar to further overvaluation.
Meanwhile, US stock markets have continued to suck in money from a troubled world and have headed to even higher levels of overvaluation, despite the violent correction last December. Increased volatility in financial markets almost never ends well, and they looked none too healthy last week.
What could possibly go wrong from here? Well, there's the geopolitical developments n the Arabian Gulf over the past couple of weeks and the oil price moving higher.
So will cash, gold and US treasuries prove to be the safe haven to sit out the next crisis in global financial markets –whenever that might happen?
To be fair markets do always throw up a few surprises to confound analysts with their heads in the history books and charts of past performance.
Cryptocurrencies have enjoyed a sharp revival over the past month with the bellwether Bitcoin up from sub-$3,000 to over $8,000.
However, even ardent crypto fans have been quick to admit that this movement looks highly manipulated by the exchanges and very unstable; any asset that shifts daily in double figures cannot be judged more than a risky speculation.
Surely if crypto was the dot-com asset class of our day then past precedent would suggest huge financial losses for investors followed by the survival of the fittest as the new champions, albeit as global currencies rather than technology giants.
But how likely is this? No central bank has embraced a crypto currency. On the contrary China has banned them completely, and other central banks treat them with distain and warn they are a paradise for fraudsters.
Could the cryptos not collapse completely if the global financial system enters another period of maximum stress, and that would send speculators back into their traditional favorite port in a storm – precious metals?
For good measure you could also worry about the sustainability of the US dollar as a store of value in a global crisis. It would be vulnerable to a return of money printing and lower interest rates, while gold would profit hugely again.
Yet in the crises of 2003 and 2009 you were much better holding the greenback or the dirham than pretty much anything else. In 2009 the UAE even added an unlimited three-year guarantee for all money held in its banking system to secure deposits.
So, what goes around come around. Safety should come first now. Moving to cash, gold and treasuries seldom made more good sense.
Peter Cooper has been writing about finance in the Gulf for two decades