On a cracking Summer's day less than 22 months ago I sat in an air-conditioned room overlooking the Thames in London's East End. It should have been a pleasant experience but, sadly, it wasn't.

I was there, invited by the Sunday Times to form part of a think tank, the idea being to predict what would happen to share prices, property values, interest and inflation rates and if we'd enough time discuss the future of private pensions. We never got round to the pensions!

Why the desire to discuss asset values and interest rates etc? Well it was because things apparently weren't looking too good. By the way things weren't supposed to look too good in November that year either, or in April and May 2005, or in October the same year, or now. That's a lot of bad times in such a short period.

Around the table were a surfeit of gloomies - there's a good one- what's the collective name for a bunch of pessimists? How about a squelch? Anyway the proceedings were kicked off by ace mathematician, Andrew Smithers, of Smithers & Co (Don't get them along to cheer up the bairns at a birthday party).

He gave us a monologue of gloom and statistics concluding that the stockmarket (he meant the UK) could only do one of 2 things - go sideways for 15 years or go down. While the others weren't quite so despondent they concurred things weren't going to get better.

Thinking back on it they probably belong to the Leonard Cohen School of Economics. Funnily enough one other present, an economist to boot, felt a bit more optimistic.

No amount of persuasion would budge them. No - demographics wouldn't help - no - big US tax cuts wouldn't make any difference - neither would record corporate earnings and low interest rates.

In mid August 2004 the FT 100 stood at 4350. Today - after the recent falls - it's 5709 - UP 31%.

The FT 250 index has performed much better - UP 58.5%. KNOW SOMETHING? We reckon much the same will happen over the next 22 months.


Source Moneyfacts May 2006

Alan Steel
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