December is rarely a happy time for financial commentators. It is the time when you have to flick through the back issues of your publication to see what you predicted in December the year before and if you managed to get anything at all right. Generally, I try to avoid making big market forecasts as it seems to be rather a fools' game (markets in the short term being pretty random things), but looking back to our 2003 Christmas issue I see that I did offer a prediction of sorts.
At the time, the consensus forecast for the FTSE 100 was for it to end the year up 7% at 4,735. Nonsense, I said. Given the huge imbalances knocking around the global economy, "anything as stable as a steady 7% over the year is pretty unlikely. The US dollar is vulnerable debt (corporate, government and personal) is at record levels and the weak Christmas sales we have just seen suggest long-suffering consumers have had enough of propping up US and UK GDP. If the global economy can successfully ignore all this for another year, I imagine the market will rise by a good deal more than 7%. If it can't, it will fall by a great deal more than 7%."
Whoops. In the event, the index looks like it is going to end the year close to the consensus forecast. I was completely wrong. However, I'm going to say precisely the same thing this year. For 2005, the consensus forecast for the FTSE 100 is coming in at around 5.7%. I just can't see it. Everything I wrote this time last year still stands, except that given the state of the housing market the odds of consumers holding on for another year are much, much lower than they were last December.
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On the plus side, if we ignore the index itself, I haven't had a bad year at all. I've harped on endlessly about the coming collapse in UK house prices. And as someone who has their flat on the market at £75,000 less than the estate agent originally recommended, I think I'm safe in saying that collapse has begun. (Don't forget the number of transactions in the housing market has fallen 33% since the summer) and that falls in transactions tend to be a forewarning of price falls.
Other than that, I've constantly tipped gold and silver, both of which have performed very satisfactorily and are still favourites. Finally, I can only find one individual share that I have tipped in this column. It is Tate & Lyle, and I am pleased to say that the shares have returned a good 40% since, so that, at least, brings me some Christmas cheer.
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