View more on these topics

Brian Tora: 2014 could see the FTSE 100 reach new highs

Brian-Tora-MM-Peach-700x450.jpg

The intervention of the Christmas holiday season demands a break in sharing my take on investment matters. Indeed, given that just three weeks have elapsed since I last took stock of market trends, it is remarkable how different the investment scene feels.

For a start, the Santa rally did finally take place and ensured a more comfortable end to the year than felt possible in early December. But 2014 feels as if it is off to a slow start.

There is a hint of normality pervading the air as we gird our loins for the challenges of the year to come, however. Quite how this may translate into market performance is hard to gauge but it may make asset allocation a touch easier to determine. 

The problem with the tinkering with the financial system that characterised recent years through, principally, quantitative easing has been that it became hard to assess what outcomes might arise.

As we return to monetary policies more akin to those which we were once used to, tried and tested models and examples are likely to allow us to determine better how economic trends will pan out. Not that anything is assured in these days of often ill-considered Government intervention.

Still, we might reasonably conclude that the worst of the fallout from the credit crunch is now consigned to history, making our main concern the effects of ending cheap money.

Thus far, emerging markets have suffered the most from investor worries, yet such a retrenchment was probably overdue in any event and simply required this trigger to ensure that
a more realistic assessment of value was established. 

Playing consumption catch-up with the developed world is a continuing theme that will surely endure, even if the real beneficiaries change over time and investment overheating remains a risk.

Thematic investors will doubtless profit from the perception of what will become important as economic power continues its shift from the developed to the developing world. But the big issue which still seems to elude most managers is shifting demographic trends, creating a time bomb in many societies. Profiting from a challenge that seems certain to reverse the expectation hitherto of regularly rising living standards was never likely to be easy but is it impossible?

This is where I find myself in a dilemma. Our policymakers have become more interventionist for the understandable reason (from their point of view) that without demonstrating a genuine concern for those responsible for their re-election, they will be voted out of office. But the pressures placed upon social services and the public purse by an ageing population and a declining workforce are hard to combat.

And do not forget that the wellbeing of the electorate is increasingly becoming dependent on the health of markets. With final salary schemes in seemingly terminal decline and regulation demanding a more predictable outcome for money purchase schemes, governments can no longer afford to ignore how markets may react to events. Get it wrong and headlines will scream that millions will be disadvantaged by adverse conditions.

As a “glass half full” merchant, I have to view 2014 as positive – arguably difficult but with the dice loaded in favour of the risk taker. Indeed, for the first time in half a generation, I believe we have a good chance of establishing a new high for the FTSE 100 index. 

Of course, this needs to be put into context. Mid and smaller cap stocks have already overtaken previous highs but seeing our benchmark index exceed earlier peaks will help confidence. 

Perhaps our biggest challenge will be ensuring euphoria does not set in

Brian Tora is an associate with investment managers JM Finn & Co

Recommended

Standard-Life-Building-700x450.jpg

Standard Life recruits Aviva distribution head to boost workplace team

Standard Life has appointed Patrick Granger as a senior business development manager with its workplace division. Granger joins the firm from Aviva, where he was head of distribution and business development. In his new role Granger will be responsible for supporting and developing relationships with corporate advisers. He will report to Standard Life head of […]

Letter to the editor: The dangers of online advice

Dear Sir, In your previous issue (19 December), columnist Ian McKenna asked: “Do we want to become a world leader in digital advice as we are in so many areas of e-commerce?” The answer to this is no. To give at-retirement advice, a comprehensive fact-find is required detailing health, income, assets, liabilities and existing financial […]

Old-lady-pension-pensioner-elderly-aged-700.jpg
1

LEBC calls for long-term care advice VAT exemption

Adviser firm LEBC has launched a petition calling for advice on care fees planning to be exempt from VAT. The Government’s Social Care bill, published last year, sets out plans to cap long-term care costs at £72,000 and increase the means-test threshold from £23,250 to £118,000 from April 2016. The bill also proposes creating a […]

David-Cameron-listening-in-2013-700.jpg

Cameron pledges to keep state pension triple lock until 2020

Prime Minister David Cameron has promised to keep the triple lock on state pensions until 2020 if he is re-elected in 2015. The triple lock, which was part of the last Liberal Democrat manifesto and introduced in 2010, guarantees pension rises in line with inflation, earnings or 2.5 per cent, whichever is highest. The Liberal […]

Dividend slump? Not if you look globally

By George Boyd-Bowman, Manager of the Neptune Global Income Fund Recent research has indicated that global dividend growth will slump by as much as 50 per cent in 2016. As collapsing commodities hit high-profile dividend payers, George Boyd-Bowman explains why the US and Japan are his top picks for income growth in 2016. Click here […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com