Sebastian Lyon said that “while investors are under the impression that politicians can wave a magic wand and solve the fiscal difficulties of the euro area, the opposite is true”.
“Central bankers’ determination to stop asset prices [whether property, bonds or stocks] from falling to their natural level only delays the longed-for end of the bear market,” he warned.
Lyon also argued that markets were no longer free but constantly subject to government intervention.
“Adam Smith’s invisible hand of the market has been replaced by the clunking fist of the state,” he said.
His comments came as the trust announced its interim results for the six months to 31 October which showed its net asset value per share rose by 4.4 per cent during the period compared to a fall of 9.3 per cent in the FTSE All-Share index.
During the last six months, the trust has added to its holdings in Centrica, Microsoft and Philip Morris.