SOME of our competitors may be relieved that this year's competition is drawing to a close. They can certainly be forgiven for feeling sorry for themselves, competing over the most volatile period for some time. The FTSE 100 ended 2007 at 6,456.9, considerably higher than it will end this year, probably between 4,200 and 4,300.
Bearing in mind the privilege of retrospect, it's interesting to look back at the predictions many pundits made for this year. To handpick a couple, stock market historian David Schwartz said he believed the FTSE 100 would end 2008 somewhere between
5,900 and 6,100, while Jupiter chief executive Edward Bonham-Carter anticipated a final figure around 6,725 and Jeremy Tigue, manager of the F&C Investment Trust, forecast 6,950. In fact, these predictions are typical as most pundits, while expecting volatility, believed the index would be over 6,500 by the end of this year. Schwartz was one of the more pessimistic forecasters.
Of course, predictions are largely meaningless, although they might sometimes reveal more about those making them. But for our IFAs, and for Angus MacDonald, they can offer comfort. Events have taken a turn that few people, rightly or wrongly, saw coming. The job of the IFAs is to shelter MacDonald from the worst of the volatility while ensuring his portfolio is in the position to benefit from the upswing that always comes sooner or later.
His portfolio is down by typically 25 to 30 per cent from its starting point of £300,000, but that is better than the broader market. Through diversification and a refusal to panic, in most cases at least, our competitors have demonstrated the value of qualified, independent financial advice. As markets appear to have already priced in the worst, MacDonald can be confident that his portfolio will recover ahead of the broader economy. This is little consolation to our competitors, bowing out at the end of a brutal year, but they will likely be vindicated in the long run.
The full article contains 352 words and appears in The Scotsman newspaper.
