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No faith in the majority

So, the majority of IFAs see rises in base rates and the FTSE. I do not like majorities because they are virtually always wrong.

One of the tenets of my business is that I tell clients all forecasts are wrong, including mine. However, I think that most IFAs must be living on Planet Zog because it is hardly rocket science to see that the FTSE is 25 per cent over-valued. The only thing which drives share pries forward in the long run is company profits and the measurement is the price/earnings ratio.

The average for the last 100 years is about 12 and, at the present time, the market is standing between 16 and 17 so therefore just to come down to the long-term average means a 25 per cent reduction and that is only the average.

•predict the market will go down over the next four or five years unless comp-any profits improve by 20 per cent or 25 per cent, when we will get back to where we are today.

As I say, this is a mean and fortunately there will be lots of companies which will outperform. There are people such as Bill Mott and Anthony Bolton who will continue to do comparatively well.

I cannot see that there is anything to keep interest rates up and I expect them to fall far nearer the American figure and I confidently expect they will be 2.5 per cent within the next year or two.

BGW Jamieson

Principal

Jamieson Financial Management,

Bognor Regis, West Sussex

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