Final FTSE of 2010

The FTSE Index of 100 leading shares ended the year at 5899.9, call it 5900.  This is well into the top half of experts' forecast (January 2010, see tables above posts), between the 5850 and 5930 predicted by Simon Marsh and Robin Greffen.  You may wonder why these investment experts made predictions across such a wide range of FTSE values - and whether Mr. Goldstein-Jackson sold off his portfolio in anticipation of the big falls in the Index which he. . . er. . . anticipated.  My conlcusion?  There's no such thing as an "expert" in this game. In fact, you can make a case from the little game we've been playing here that their "expertise" is positively dangerous to your financial health.  

Predictions for end-2012 will emerge in the weekend press Business/Money sections, so I will start the game again.  Bet the experts at the lower end of the forecasts here are hoping no-one kept a note of their predictions, hee hee!

Happy and Prosperous New Year to all my readers.

NOTE  A new range of FTSE Index predictions for end of 2011 is now shown above.  I will leave the 2010 predictions for a few weeks for comparison.  The 2011 predictions include one made by "Mr.Fox" (See below the table of FTSE predicted values above.) Readers are invited to suggest other techniques and methods for predicting future values of the FTSE, outbreak ot World War III, or anything else. No goat entrails, please. That's very old hat.

Somewhat Lost Interest . .

in the blog, mainly because no one has been commenting much, so I assumed no one was reading it much. I have restored the Option Trader's Diary to report my full year result for 2010 and to check out the expert's predictions for the end-of-year FTSE value.  At the moment, the lads at the top of the Guesstimates Table (above) are doing best - but there's still 2 days trading to run.  My guesstimate, for what it's worth, is that the FTSE will end the year in the 5950 to 6050 range, but don't ask me even to guess where it will lie at close of business 2011.  If you push me, I'll hazard that the FTSE Index will be higher at end 2011 than it is just now. We shall see.  

Goldman-Sachs . . .

 . . . are to be prosecuted for fraud!  They devised a scheme linked to sub-prime mortgages, that could not but fail, then placed big bets on it failing.  Why can't I dream up fool-proof wheezes like that?

Some Geezer on BBC Radio . . .

. . .  this a.m was arguing that the whole of the world economy is a gigantic Ponzi Scheme.  All over the world, governments have borrowed so much money that the only way they can pay the interest due on the money is to borrow more money and the only way they can pay the interest on THAT money is to borrow  . . .  but I'm sure you get the idea.   So far, only Greece appears to be in serious trouble . . . and Thanks Be that UK is not in the eurozone, so UK taxpayers, for the time being, won't have to rescue the Greeks . . . . . But how long before the whole house of cards comes down?  BTW, made £1136.80 on the April FTSE 100 Index contracts. 

Rearranged . .

. . . my February FTSE contracts.  The Index has climbed quite a few points this week.  So I have rearranged my February contracts which were originally struck at 5900 Calls and 4900 Puts, 5 contracts each side.  I now have short contarcts as follows:- 7 x February 4950 Puts and 7 x February 5500 Calls.  These contracts expire of 29th. February at 10.30 a.m.  My potential profit now is £1323.00p

Hooray! Hooray!

BBC News tells me today that figures released by the National Office for Lies, Damned Lies and Statistics show that the economy of Great Britain plc is "out of recession."  First question.  How many of the words in that sentence do you understand?  Can you, for instance, explain what is meant by "the economy"?  In the context of this ill defined "economy", what is meant by "recession" and hence, what is meant by the economy being "out of it"  Remember that the same NODLS (see above) told us we were out of recession in the 3rd. quarter of 2009.  Then they decided we weren't.  Or some other quango using different figures told us we weren't. Later on, another expert on BBC TV News said words to the effect that "Until we get out there into the High Street and start spending again, the economy will continue to something-or-other"  So there's one definition.  "The economy" is you lot pouring your money into Marks and Spencer, etc. And I hope you can now see why I don't mind in the least using vague terms like something-or-other, since I don't believe the weasel words like "recession" mean anything much either.

Now, what about "recession"  Believe it or not, there is a definition of this!  It's something like "four consecutive quarters of negative growth."  "Four consecutive quarters" I understand, "negative growth" I'm not so sure.  Four?  Might be three.  I forget.  Who cares!  But accepting the definition, we are "out of recession" when the 5th quarter turns positive.  O.K. Now we are getting somewhere!  Let's see . . .  Q1 Growth minus 3%.  Q2  Growth minus 1.5%  Q3 Growth minus 2%. Q4 Growth minus 1.25%.  Now we are officially in recession.  So in Q5, NODLS now tells us, growth is PLUS 0.4%.  In terms of the definition of "recession" we are now "out" of it.  But does PLUS 0.4% after MINUS 6.75% in the previous 4 cheer you up?  Should it?

Lunchtime today . .  the actual figure came out.  WOW. Output however they measure it, is up by 0.1%. Nought point one percent! That's ONE part in ONE THOUSAND!  D'you really think economic data can be measured that accurately.  Goodbye.

It's a Funny Old World!

President Obama announces his intention to restrain the antics of American B(w)anks.  He wants this group of eternally greedy, self-regarding billionaires to recognise and start acting on a simple idea. "Wall Street exists for the benefit of the American economy."  And not "The American economy exists for the benefit of Wall Street." And what happens?  Wall Street (via the Dow Jones Share Index) immediately falls 2%. Does this mean Wall Street disagrees with him, or does it mean the US economy disagrees with him?   In my expert opinion, which of course, no one ever takes any notice of, it confirms something I have long suspected.  The Dow Index, like the FTSE in this country, has no real connection to "the economy."  These market indices are actually a measure of how confident the financial institutions are that they can rip the economy off.  The markets have fallen because the people who decide what its level should be (i.e the B(w)ankers) are suddenly worried that a couple of noughts might get chopped off their bonuses. But of course, I'm just a tired old cynic who makes loads a' munni by taking no notice at all of financial and business news, and in particular, of Financial Advisers, who, whether independent or not, know no more about finance than you and I can learn by reading a few books.  So here's a piece of financial advice, for which I won't charge you an arm and a leg.  At the moment, Premium Bonds represent a good CASH investment for small(ish) amounts of yer spare loot.  And I'll tell you when this ceases to be true.

Postman Prat Put in his Place

Overpromoted postman Alan Johnson, our inhumane Home Secretary who, obeying the dictats of his political masters in the Unmentionable States of America, sanctioned the extradition of Garry Mckinnon, has been given a bloody nose by the High Court.  Remember, this arrogant little cretin-posing-as-politician was once a postman, who, having outgrown his postman's boots, has grown far to big for the new ones given him by Gordon "Everyone's Booby" Brown.  Well, Mr. J . . . how will you go about setting yourself above the law now, which,  at least in your own opinion, you are, or should be.  I can imagine you raging in front of your shaving mirror, "If these silly bigwigs in the courts don't leave me alone to wreak havoc in peoples' lives, I'll make sure they never get any post ever again. I know where they all live!" Johnson is a disgrace to his Office.  Our best hope is that he is soon relieved of it in favour of someone who puts the interests and welfare of British subjects above the whinings of Americans whose feelings have been hurt, poor little dears.

February 2010 FTSE Index Options

I redeemed my January FTSE 100 Index options at a cost of £305.20, leaving me a profit for January of  £1769.60p. At the same time, I opened a position for February by selling 5 x 4900 Puts and 5 x 5900 Calls, for a potential profit of £1362.00p if the FTSE Index lies between 4900 and 5900 when these options expire on February 19th. at 10.30a.m.  The FTSE Index stood at about 5505 when I did these trades.

Leave It To The Experts!

15 of them have stuck their necks out and made predictions of where the FTSE Index of 100 Leading shares will be at close of business on the last trading day of 2010.  Note the range of affiliations. Investment Managers (IM), Investor Magazine Writers, brokers . .  to a man (where are the ladies, by the way?) they are all "financiers" or "financial experts", or something.  So how do they arrive at such widely diverging takes on that which they pretend they can predict? Clearly, the first thing to learn is DON'T TRUST THEM WITH YOUR MONEY - or if you must, trust only the one whose prediction is correct. (Er . .  er . . . there's a catch in that somewhere!)  You can chase the weblink above the table of predictions to the F.T webpage where these 15 sages "explain" why the FTSE Index will end up where they say it will even though it won't because they're all so different. Wake up, folks . . . NO ONE can guess the future. But I suppose these geezers have to do something to justify their telephone number salaries and bonuses-or-we'll-emigrate,-you-ungrateful-British-mugs.

Here are my thoughts on what the 2768 FTSE points minimum-to-maximum suggests.  First; whatever "economics" is, it is not a predictive science. For if it were, these predictions would surely be much closer together.  I suspect (but cannot prove) that economics would be a predictive science if it could distinguish "first order" from "second order" influences.  I suspect that the only influences that can be measured with any accuracy are "second order" ones, that have no real effect on economic outcomes.

How will I incorporate these all-over-the-place expert predictions into my option trading strategies during 2010?   Briefly, I shall ignore them. Taken as a bunch, they are meaningless. But I will leave them posted until next New Year, and we'll see who got closest.

My own FTSE prediction - remembering that mine will be correct? eMail me if you really want to know. (dr.FTSE@googlemail.com)

May 2010 . . .

. . . be the prosperous New Year we all hope for!  I renew my annual resolution, which I kept throughout 2009, to resolutely ignore the advice of anyone described by the BBC or any other organ of the British media as an "expert."  That way I might just maintain the winning run I enjoyed this year.  This Sunday (3rd.Jan.) is the day when these self-regarding and magnificently overpaid gals and guys give us their wildly divergent predictions - in the Business/Money sections of the broadsheets - of where the FTSE Index will be on Dec 31st. 2010. There will be a big spread of predictions as usual. Many experts will be wildly wrong. One or two will be somewhere near the mark by the Laws of Probability

I ALONE, The All-Knowing Doctor FTSE, can tell where the FTSE Index will be at the end of 2010! And don't you forget it.  Post a comment - with YOUR guess, if you like - and I will reply via eMail with my prediction.

In the meantime, here's a weblink that tells you about things much more interesting than the FTSE Index or Option Trading . . .

Happy New Year!