Today is Thanksgiving – so maybe it is time to reflect on markets to date in 2013 and the outlook for 2014.

To date this year the S&P 500 has rallied by 25% and 166% since 9th March 2009; the FTSE in the same periods by 12.7% and about 92%. The FTSE 250 is up 23% on the year. The DAX has rallied by 22.6% in the last year. By any standards these are substantial gains.  We have also seen 69 IPOS come to the market in the UK this year, valued at £17.3 billion against IPOS valued at £2.8 billion last year.

So one can understand the reticence and reluctance of investors to surrender ‘hard earned’ gains. So many have shut up shop already.  After the RMG and Merlin IPOs, there was always the chance of indigestion hitting the market. Investors are far more fly than they were a decade ago! Fund managers don’t like buying from private equity companies, which have had the living daylights, in terms of value, squeezed out of them.

In regards to the valuation of RMG and the furore created in Parliament, I think the government has always had a hidden agenda.  The RMG always was the sprat to catch the mackerel. Had the RMG float been anything but a howling success, investors would have spurned any offerings from TSB, Lloyds and eventually RBS. So in my opinion.

I suspect that there won’t be much of a Christmas rally in the UK as mining, banking and energy stocks, which are influential in the FTSE 100 are not vogue sectors.  3rd quarter GDP of 0.8%, we suspect may not be sustainable – investment in business on a pro rata basis is at its lowest ebb since 1955.

2014 – The first 6 months look very choppy as tapering quantitative in the US looks like a massive imponderable.  I am also very concerned about Europe’s recovery – I don’t believe a word of it despite reassurance from the ECB in good faith and the charming robust rhetoric from Van Pompuy and Barosso. Greece is only a pimple on economic society, Spain and possibly France look like carbuncles waiting to be lanced.  However equities in the 2nd half of the year may well crack on.


These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator
+44 (0)20 7886 2775

Panmure Gordon & Co
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