Sensational prediction by Full Circle: ‘If your wealth is subject to FTSE style volatility, your eventual ruination is a when, not an if.’To put some kind of scale on their success, measured against the FTSE with March 2000 on a zero line, the pink index is on -80. The Full Circle model portfolio stands at +203.
There are others who could claim such a record, but none of whom I’m aware refuting the general investor view that ‘in the long term, equities are best’. Like The Slog, FC takes a contrarian view based on experience and common sense, the only gap between us being that they know far more about this than I do. Their belief is ‘what’s best is best’ – and this means choosing asset classes at the right time, and then leaving them in the same orderly manner…based on data and global mood, not the rulebook.
In 2006, FC forecast that the FTSE would fall to 3,500. It hit its low point at 3,498. This is a summary of what they had to say last week:
* The artificiality of current interest rates will end, market interest rates (government bond yields) will rise and lead official rates higher. A combination of higher interest rates and deflation will make ‘real rates’ soar, making them unbearable, especially for sovereign states
* The Euro was an absurd creation – a single currency with a common interest rate with disparate countries retaining control of their own fiscal policy.
* The euro is potentially in its death throes, and the dollar is doomed to lose its reserve currency status.
* The average redemption date of existing UK gilt issues is about 15 years – much longer than most developed nations.
* Gold is a major unremitting bull market.
* The FTSE will reach a new low of 2000.
* In the medium-term, Sterling is in a unique position to strengthen as a currency.
Some of you will recognise this as pretty much my view too. As to the last forecast, I think it depends on whether the Yuan floats – and if so, how freely – and whether the Coalition stops shaving off little bits of debt and decides to just get on with it. The smart money is, I think, on the latter outcome. The Yuan remains in turn dependent on what happens in terms of costs and growth inside China.
So you see, it’s not just me. And this isn’t just any old cowboy outfit wittering on: Full Circle organises two prestigious London-based investor seminars a year, at which speakers have included US guru Woody Brock and – last time – FT deputy editor Gillian Tett. Long-term Slog fans will remember that this site is a long-term fan of her approach and insight.
As I always say, I can’t offer a recommendation and I don’t give advice: I state merely what I think, and what I’m doing. This has seen my pension pot do better than the other 95% over the last five years; I expect it to do even better over the next three.
The Slog 