Equities are set to steam ahead next year, with one expert suggesting that 2011 will be the first for 12 years in which the FTSE 100 of leading shares breaks into new ground. It's good news for both dyed-in-the-wool investors and savers who are tired of minimal returns on their money and are now looking for something more.
Gavin Oldham, chief executive of The Share Centre, is forecasting the FTSE 100 index will end 2011 "at or above 6,750". UK shares are currently hitting two-and-half year highs with the index around the 5,880 mark.
He adds: "As businesses look forward to a leaner, more efficient post credit-crunch world, investment and earnings will rise on the back of continued low interest rates."
And he's not alone with his optimistic view. Some 92% of fund managers are predicting that markets will rise in 2011, compared to 74% this time last year.
The poll, carried out by the Association of Investment Companies, reveals that 77% of fund managers are looking for the FTSE 100 to end the year somewhere between 6,000 and 6,500. And 80% of them think equities will be the best-performing asset in investors' portfolios next year, followed by gold and then bonds.
Their positive view is good news for beleaguered savers and investors who want to see their money grow. Especially as none of the fund managers mentioned property or cash as set to be top performers in 2011.
But of course it's not all plain sailing. For the first time, geopolitical instability and the threat of terrorism have been cited as the biggest threat to equities in 2011. These concerns were followed by the threat of global recession and high inflation.
And Alan Brown chief investment officer at Schroders urges caution. "Equity assets are attractively priced as long as we can avoid Double Dip," he says. Adding: "Any material increase in the likelihood of double dip [recession] should be treated extremely seriously indeed.
"Double Dip [recession] is surely unambiguously bad for equities. Earnings would come under severe pressure; the banking sector would rapidly find itself in crisis again, but this time without an effective lender of last resort."
Philip Poole, global head of macro and investment strategy at HSBC says he thinks a double dip recession is unlikely to occur: "In terms of fundamental drivers, both global economic and corporate earnings growth are expected to tail…
