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So Christmas is with us again. Resisting the temptation to cry: "Bah, humbug!", I have busy been compiling my list of the sort of presents I would like Santa to deliver to this particular member of the financial services community. You know the sort of thing. Stockmarkets 20 per cent higher. Immediate retirement for all compliance officers and regulators. Carol Galley&#39s bonus. A week free of Asian scare stories.

The reality for 1998 will, I fear, be very different but the presents you receive at Christmas seldom live up to expectations. Suggesting to Great Aunt Agatha, who is busily spending the fortune left to her by her late husband, that a Ferrari would fit nicely into your drive is unlikely to divert her from the course of sending you a Marks & Spencer matching tie and handkerchief (polyester, of course).

I have often thought that a copy of next Christmas&#39s Financial Times would make a good present. Imagine having the foresight 12 months ago to realise that British Gas would be the best-performing share in the FTSE 100 index, with a rise of over 83 per cent.

Even though the FTSE 100 index has knocked smaller-cap stocks into a cocked hat during the past year, the biggest rises have been recorded by shares that many of us may never have heard of. Among the companies to double their share price during 1997 are Flying Flowers, Chepstow Racecourse and Fired Earth. Coffee Republic trebled in price to 23p while Meickles Africa and Shield Diagnostic gave investors a fivefold return on their capital, the latter company scooping first prize with a 478 per cent rise.

Of course, it was the smaller companies that also produced the biggest falls. If you had bought BKG Resources or Multi-Media Corporation, you would have had but a very small percentage of your investment left at the end of the year. It all goes to show that the real excitement remains in the smaller-company end of the market.

I should be compiling my tips for 1998 but, as Santa is unlikely to deliver me next year&#39s Christmas FT, I will have to do some groundwork and see if our analysts can come up with any ideas. Not that analysts can always be relied upon. In an investment management organisation such as our own, we tend to have fairly generalist researchers and, as the saying goes, they know less and less about more and more until eventually they know nothing about everything. Investment banks, on the other hand, have adopted a more specialist approach so that, ultimately, their analysts know absolutely everything about nothing at all. Not much hope there, then.

If the presents that we in this industry are likely to receive are not what we truly wish for, what is the good St Nicholas likely to dish out to IFAs and investment managers in the new year? More regulation is looking favourite, with a shin-up for non-financial companies selling vanilla-flavour financial products. We at the professional end of the market should not take this too amiss. For the majority of people, good sense will prevail and good advice will be sought. It might all serve to keep up the pressure on efficiency as costs are driven down to enable companies to compete.

One investment that will not be on the buy list for the new year is gold. Languishing at a low, no interest has been generated – even in Asia where there has traditionally been a demand for the yellow metal when problems arise. Perhaps I can give you a flavour of what the new year may have in store through the words of that seasonal song, The Twelve Days of Christmas. It could be worth a chorus or two at the office Christmas party.

"On the 12th day of Christmas, my true love sent to me,

A 12-page Know Your Client fact-find (part 1),

11 per cent mortgage interest rates,

Ten volumes of new FSA regulations,

Nine Asian countries in crises,

Eight new high-street pension providers,

Seven demutualising life companies,

Six economic wise men,

Five gold sale signals,

Four trade associations,

Three redundant SROs,

Two Budgets a year and

A single financial services regulator."

A merry Christmas to you all – and as prosperous a new year as you will be allowed.

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