The Bettr Blog

Predictions for 2012

Jan 11, 2012 | Investing

[vc_row][vc_column][vc_column_text]At this time of year, investment pundits start sharing their predictions about the likely performance of the FTSE 100 over the next twelve months.

It is always a fun game to observe but the important thing is to treat it exactly as that – just a game. When asked myself where the FTSE 100 index will end up in 2012, the only answer I can really give is “I don’t know!”

To some extent, the performance of the FTSE 100 (or any other arbitrary investment index) doesn’t matter too much. It would be very rare (and probably quite foolish) for any investor to be solely exposed to a single index or investment asset class.

Instead, a diversified portfolio (containing many different asset classes) offers a much better chance of having a successful investment outcome.

So what can we learn from a difficult year like 2011?

Those who invested solely in equities have had a disappointing year (thirty-seven out of forty-five markets tracked by MSCI posted negative returns); whereas fixed interest investors, and in particular UK gilts, have done very well.

As Dimensional founder David Booth is fond of saying, the most important thing about an investment philosophy is that you have one. For those investors (and professional advisors) who switched course from a sensible long term buy-and-hold philosophy to a market timing strategy, we suspect few would have been able to clearly articulate their investing beliefs and why they had shifted.

Legendary investor Benjamin Graham offered the following observation nearly forty years ago: “There is no basis either in logic or in experience for assuming that any typical or average investor can anticipate market movements more successfully than the general public, of which he himself is a part.”

Good advice then, good advice now.

Source: Dimensional Fund Advisors, Weston Wellington, 10.01.12[/vc_column_text][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” anchor=”” in_content_menu=”” content_menu_title=”” icon_pack=”font_awesome” content_menu_fa_icon=”” content_menu_fe_icon=”arrow_back” text_align=”left” video=”” video_overlay=”” video_overlay_image=”” video_webm=”” video_mp4=”” video_ogv=”” video_image=”” background_image=”” pattern_background=”” section_height=”” parallax_speed=”” background_color=”” border_color=”” side_padding=”” padding_top=”” padding_bottom=”” color=”” hover_color=”” more_button_label=”” less_button_label=”” button_position=”” css_animation=”” transition_delay=””][vc_column width=”1/1″][vc_empty_space height=”32px”][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” anchor=”” in_content_menu=”” content_menu_title=”” icon_pack=”font_awesome” content_menu_fa_icon=”” content_menu_fe_icon=”arrow_back” text_align=”left” video=”” video_overlay=”” video_overlay_image=”” video_webm=”” video_mp4=”” video_ogv=”” video_image=”” background_image=”” pattern_background=”” section_height=”” parallax_speed=”” background_color=”” border_color=”” side_padding=”” padding_top=”” padding_bottom=”” color=”” hover_color=”” more_button_label=”” less_button_label=”” button_position=”” css_animation=”” transition_delay=””][vc_column width=”1/1″][vc_googleplus annotation=”bubble”][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” anchor=”” in_content_menu=”” content_menu_title=”” icon_pack=”font_awesome” content_menu_fa_icon=”” content_menu_fe_icon=”arrow_back” text_align=”left” video=”” video_overlay=”” video_overlay_image=”” video_webm=”” video_mp4=”” video_ogv=”” video_image=”” background_image=”” pattern_background=”” section_height=”” parallax_speed=”” background_color=”” border_color=”” side_padding=”” padding_top=”” padding_bottom=”” color=”” hover_color=”” more_button_label=”” less_button_label=”” button_position=”” css_animation=”” transition_delay=””][vc_column width=”1/1″][vc_tweetmeme type=”horizontal”][/vc_column][/vc_row][vc_row row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” anchor=”” in_content_menu=”” content_menu_title=”” icon_pack=”font_awesome” content_menu_fa_icon=”” content_menu_fe_icon=”arrow_back” text_align=”left” video=”” video_overlay=”” video_overlay_image=”” video_webm=”” video_mp4=”” video_ogv=”” video_image=”” background_image=”” pattern_background=”” section_height=”” parallax_speed=”” background_color=”” border_color=”” side_padding=”” padding_top=”” padding_bottom=”” color=”” hover_color=”” more_button_label=”” less_button_label=”” button_position=”” css_animation=”” transition_delay=””][vc_column width=”1/1″][vc_facebook type=”standard”][/vc_column][/vc_row]

Disclaimer: This document is intended for informational purposes and no action should be taken or refrained from being taken as a consequence of it without consulting a suitably qualified and regulated person.  It does not constitute financial advice under the terms of the Financial Services and Markets Act 2000. It is not an offer to sell, or a solicitation of an offer to buy, the instruments described in this.

Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investment, when redeemed, may be worth more or less than its original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.