CALL IT AGAIN SAM
Last December I brought the Christmas story up to date. Headlines at the time predicted double dip recessions, inflation, and debt problems in Dubai and Greece leading to economic disaster. Couldn't see it myself.
Here we are a year later. The World is coming to an end again because of Ireland, Belgium, Portugal and Spain. The Euro is going to go under they tell us. I'll tell you what we're under - Two feet of snow!
12 months ago I talked about the Three Wise men from the East being followed by the Star, in the shape of Anthony Bolton. He was off to China to start up a new fund following his many years of success in the UK. So how did they fare?
Well Angus Tulloch is up over 25%, Graham French over 26%, and Robin Geffen (Russia fund) up almost 34%. Anthony Bolton's China Fund didn't launch until the middle of April but is already up 24% - all after charges.
And just to remind all those who claim charges are too high for investments and pensions, and that all you need to do is buy cheap funds passively investing in Index Trackers - over the last year the FTSE is only up 10.1%.
Last week, in the National Press, yet another one of the industry youngsters claimed that nobody can predict the future with any accuracy and you can't beat the Index by studying past patterns, cycles, sentiment and other repeating factors.
I wonder what Tom Dobell at M&G Recovery would make of that. For 18 years Tom has beaten the total return of the FTSE - every single year. That won't surprise others including Neil Woodford at Invesco Perpetual whose Income fund produced 3½ times more return than the FTSE over the so-called lost decade!
Let's hear it this year for Sam Eisenstadt who retired after 63 years as a Research Director at US company US Value Line, who specialise in portfolio management based purely on statistical analysis (leaving emotions on the sidelines).
He pioneered a way of evaluating markets by studying 10 year revolving records in relative earnings and prices, the momentum of prices, earnings growth, earnings surprises and so on. He came up with a way of ranking 1,700 stocks in the US between 1 and 5 (5 being those to avoid, and 1 being those to buy).
And it's not a bad way of doing things apparently because over the last 30 years Sam's predictions are consistently number one in the US as measured against other market tipsters. Last December he predicted the S&P 500 would rise by 20% (right now it's up 17%). Let's hope Sam calls it right again, because now he predicts it will be up a further 12% in the next 6 months.
Over the next 12 months we think Sam will be right again with the US surprising pessimists, and the long term bull market and Emerging economies and Commodities continuing. If interest rates remain low, which we expect, small cap and growth funds will likely outperform too. We believe optimism will be well rewarded next year too and I leave you with some quotes that I hope will bring cheer to all of you at this festive if frozen December.
"Between the optimist and pessimist, the difference is droll;
The optimist sees the doughnut, the pessimist the hole" Anon
"After 5,000 years of recorded human history you wonder, what part of 2 million sunrises don't pessimists understand" Robert Brault
"A pessimist is one who makes difficulties of his opportunities, and an optimist is one who makes opportunities of his difficulties." Harry S Truman
"I am an old man now and I have known a great many troubles, but most of them never actually happened" Mark Twain
"Optimist - someone who figures that taking a step backwards after taking a step forwards isn't a disaster - it is a Cha-Cha" Robert Brault
"Optimists are nostalgic about the future" Anon
"In the long run a pessimist may be proved right, but the optimist had a better time on the journey" Anon
"A pessimist is one who feels bad when he feels good for fear he will feel worse when he feels better" Anon
This letter is the personal view of Alan Steel. Please check the appropriateness to your individual position with your adviser before taking or refraining from any action.