January 2011 Investment Review

2010 was a rollercoaster of a year. The FTSE 100 started the year at 5500, dropped to 5100 by February, rose to 5800 in April, flopped to 4800 in July and then rose back beyond 5800 at the end of the year. Get ready for 2011 which should be more of the same.

Could we have best guessed the rises and falls in the FTSE 100 along the way as The Okey Cokey suggests? “You put your whole self in, your whole self out, in, out…” If anybody could they would have made 39% in a market that most of us living here regards as in deep recession. As it was the FTSE 100 rose by about 6% over the year. I know the market is today above 6000 points, but I regard the top 200 points as froth.

In January 2010 many economists got out their crystal balls and guessed the market would end the year at 5800 points, but not one guessed along the way it was going to be quite so bumpy. The consensus view this year sees 2011 end around 7000 as the global recovery continues.

Of course where possible, the bulk of our UK investment is in the Vanguard UK Equity Index fund which returned 18% by only choosing the strong companies amongst the FTSE.

VAT increase

I am happy to confirm that your annual investment management fees will not be increasing due to the increase in VAT. Investment management, where we act as intermediaries, is VAT exempt. Of course all our business costs will be going up by 2.5%, but we will absorb these costs and not pass them on to our clients.

As our clients funds go up so does our income. If our clients win, we win; if our clients lose, we lose. It’s my job to ensure we win.