When, When, When?
There is almost no limit to the advice and speculation when it comes to predicting the market. From talk of the inflation rate peaking to the housing market bottoming, there is any number of estimates that the everyday investor can hang his or her hat on.
Analysts look for trends before making predictions so why can’t we, as the everyday investor, do the same and look for the growing trend in analysts’ predictions to find some sort of consensus.
Most analysts are offering a difference of opinion on how long the UK economy can expect the same pressures of increasing inflation, credit squeezing and high energy prices. Some analysts expect some clear air by the end of 2008, others 2009, a few commit to 2010, which is so far ahead for the UK market you could barely call it a commitment at all.
Bank of England governor Mervyn King is confident that the inflation rate will fall back into the two per cent range the government is comfortable with, but he was not so clear on timeframes. There were hints that it wasn’t interest rates that would pull back inflation but higher energy and food prices. This links well with the commodity analysts.
Most analysts of commodities expect oil to start retreating sooner rather than later, and talk of US$200 a barrel has disappeared.
Commodities, because of supply and demand, will be the first indicators of market weakness, which will then probably flow on to inflation.
Most analysts also agree that getting through the crisis facing the global markets, will give investors a much healthier and rewarding market in the future.
