By Alan Steel

An edited version of this article appeared in The Scotsman

Saturday 5 January 2013

Phew, looks like we made it. We survived the Mayan do dah after all and the 500 ton Asteroid a couple of weeks back that apparently missed us by a whisker. A whisker in this case being 140,000 miles. Now all we have to do is get through "The Fiscal Cliff" and it's plain sailing. Or is it?

We survived the rampant fears of a year ago too, and that's not including yearly predictions of a Scrooge like Christmas. I read recently that although Boxing Day Sales figures are up at least 20% over the previous year that proves we're still in a recession because sales are different from margins. Work that one out.

Remember the expert predictions for 2012? Inflation would swamp us. Stockmarkets would go sideways at best. Europe would collapse. China was heading for a hard landing, whatever that means, and Greece was such a basket case that new Drachmas were secretly printed and ready to go any minute. All the PIIGS were so deep in soapy bubble there was no hope. The US Dollar would go into freefall, Central Bankers hadn't a Scooby, debt was too high, and we'd be in recession for far longer than it will take Rangers to get back to the SPL.

Funny then that this little Piggie called Spain beat the market, as did the little Piggie that stays in Rome, and all the little Piggies sang He He He all the way home. So while investors were buying record levels of "safe" bonds and sitting in deposits earning zilch, stockmarkets produced double figure gains just about everywhere, with risk takers doing best. Italy's stockmarket since last June has trounced the World Index by 28% with Spain not that far behind. And if you have time, check out how well Ireland is doing on the trade surplus front with the others not far behind.

It's almost impossible to predict what's likely to happen on a 12 month view, but surely there's a better way for investors to choose asset allocation than be driven by annual fears pumped out daily on News Channels, or listen to economic followers of Dads Army's Private Frazer. 30 years ago I attended an Investment/Tax Planning seminar in London. The star of the show was a wee man, retiring after a lifetime advising investors. His parting shot was that you should use economic commentators as a guide to how to successfully invest - on an inverted basis. In other words, do the exact opposite he said and you'll not go far wrong.

Economically there's little doubt things are improving globally despite what's catching the attention of "Bad News At Ten". It's no fluke that since the bottom of Stockmarket Indices in March 2009 that some including the S&P500 have doubled, and that ignores reinvested dividends. Europe is likely to surprise the miseries, and over the pond there are massive game changers swinging into action, namely Generation Y, the rebirth of US Manufacturing, and oil and gas discoveries which will wipe out the US trade deficit faster than a speeding bullet.

But take great care, for our toothless financial regulators the FSA, have unleashed on an unsuspecting investing public a new set of rules that's supposed to benefit investors but is destined to do the opposite. Instead of simply removing industry conmen who mislead and mis-sell to their clients - believe me it's not difficult to stop them, they have gone down an obsessive road which is doubling charges to the end user - the investor.

And at the same time advisers are reducing their service and workloads by dumping clients into multi manager funds carrying even more unnecessary charges. So my message for 2013 is this - look forward to another decent year for equities, be prepared to buy them on bad days moving from your perceived caution, scrutinise very carefully what you are paying in charges and then shop around .

Have a good year!

An edited version of this article appeared in The Scotsman

Saturday 5 January