Well so far, but forecasts for 2010 are very mixed. I’ve learned from my own mistakes that making predictions, especially about the future, is a mugs’ game.
Paul A Samuelson, who won the Nobel Prize in Economics in 1970, amused many and confused more when he said that Wall Street indices predicted nine out of the last five recessions!
Yet despite the inherent folly of predicting the future, this time of the year there are plenty of pundits doing just that.
Five leading investment managers have set out their thoughts for 2010. The average estimate for the FTSE 100 is 5,210 with the highest forecast at 5,850 and the lowest at 4,700. Hmm, very interesting, especially after the first day of the trading year saw the markets get off to a flying start.
So why are our experts so bearish? The issue is that the market recovered so dramatically from March onwards last year and every step up was met with relief but surprise. Many have talked about too much too soon, but isn’t that exactly how the markets react? Bad news is always overplayed and when the good news bandwagon rolls into town, everyone jumps on it.
Yesterday sentiment did harden a little as Next disappointed traders as did the announcement from Nestlé that they would not be pursuing Cadbury. It was also announced that Nestlé is buying Kraft’s pizza slice for £2.3bn.
This leaves a bolstered Kraft as the only interested party in Cadbury, which did little for the UK’s confectioner as the share price opened down 19 at 786.
Despite Next taking bottom slot on the FTSE 100 rankings yesterday some analysts are talking the stock and the sector up. While the upmarket retailer John Lewis is not a quoted company, it excited analysts when it revealed that in the five weeks running up to the New Year its sales hit £500m.
This announcement will heighten interest in today’s results from Marks & Spencer when it reveals its quarterly sales.
Last year RBS was the biggest loser on the FTSE 100 but yesterday led the optimism in the financial sector when it put on almost 10% before lunch.
Here we are, a few days into the year and already above the average estimate for 2010. So what’s my prediction? Expect the unexpected, of course!
Tim Jenkins heads TJ Markets. This column is not an offer or solicitation to buy or sell securities, nor a personal recommendation. Opinions constitute judgements at the time of transmission to The Western Mail and are subject to change without warning.