Thursday 3 January 2013

Happy New Year!! - Outlook 2013?

Happy new year everyone! Many thanks for reading and hope you all enjoyed this blog in 2012? I've certainly enjoyed writing it. Just checked my stats and it's had 2487 hits in its first year of operation, with the last few months averaging 400/month, so thankfully I haven't just been writing to myself :)

If anyone wants to get in touch to discuss any of the topics mentioned, feel free to contact me on twitter or . Constructive feedback/debating welcomed.

Looking back at 2012 after quite an eventful year the FTSE100 gained about 6/7% ish.  I can't remember where my portfolio was exactly this time last year but beer mat calculations say I've more than doubled that figure albeit with dividends reinvested. I will start taking better records from now on for improved accuracy. Fingers crossed for similar out performance in 2013.

So looking ahead, what do I think the market will do this year? When asked a similar question the legendary capitalist J.P.Morgan replied - 'It will fluctuate.'
I will not pretend to know any better than him; all we can do is look at the facts and position ourselves accordingly.

The P/E ratio of the FTSE100 is around 11.5, still fairly cheap compared to a long run average of about 14/15, and if you look more closely at individual companies I think there is some fantasic value there at these prices.

There are many factors that could cause an upset this year. Global fiscal tightening is almost bound to carry on as nations struggle to overcome their chronic debt problems. I'm expecting the USA to adopt a more conservative approach which is fairly typical in a post election year. Notably the US markets have a history of underperformance in the years following elections. The UK usually tracks the US quite closely so this might have some effect on us.

Energy prices will continue to play a huge part in things. If oil prices push higher this will choke global growth and make progress increasingly difficult. If it falls however this would have a great positive effect on business. This is very hard to judge, will be interesting to see if new drilling techniques such as fracking etc can make the West less dependent on oil from the Middle East.

Casting doubt aside we do appear to be in a bull market, and I'll certainly be sticking with stocks this year, due as much to lack of alternative choice as any other reason. My 'Investment Horizons' blog post from last February is still mostly pertinent and I hope still worth a read. For anyone that hasn't yet here's the link.

Wishing you all the best with your investments and otherwise in 2013,


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