Great year for the Sids

No pain, no gain: our man's portfolio

My suggestion that Footsie would end last year at 7,000 points was not far off the mark. In the event it was a noble failure, with the index hitting 6,950.6 on the stock market's last trading day of the century.

My suggestion that Footsie would end last year at 7,000 points was not far off the mark. In the event it was a noble failure, with the index hitting 6,950.6 on the stock market's last trading day of the century.

When in the dying days of 1998 I offered the 7,000 prediction it seemed a quite outrageous forecast. After all Footsie started 1999 at 5,882.6; at one time during what was a volatile 12 months it was down to 5,770.2. Forecasting the direction of the market is a hazardous, not to say foolish, exercise. But it is tempting and in the unpredictable world of investment it is strangely fitting that what has been an incredible year ended on such a high note.

The supporting indices have also joined in the merry romp, achieving new peaks. Often the second-liners have started the year in top form only to falter in the second half. Last year they ended with a rampant go-go surge which threatened to put Footsie in the shade.

But perhaps the most significant development was the role played by the private investor. Probably for the first time in living memory the small player - the Sids of this world - made the running. Undoubtedly their sudden rush of interest gave the market its spectacular burst of activity in the final months of the year.

Very often they stuck to Internet tiddlers, pushing anything with a dot.com to its name to often absurdly high levels. They still dominate the fledgling Internet sector with most institutions content to sit on the sidelines. Whether they will eventually be sucked in is one of the questions which could dominate the direction of the market this year. Of course, it would be foolish to expect the Web craze to continue at the same frantic pitch as last year. Private investors found it enticingly easy to make profits but even a hi-tech pack of cards is not built for long- term security. And should the Internet bubble burst it is likely that the interest private investors have displayed will at least to some extent evaporate with the market reverting to the institutionally led pattern so evident for years.

So what about this year? I believe it is doubtful the market will continue the high-spirited excitement it enjoyed towards the end of last year. But I remain optimistic although perhaps not quite so bullish as I have been in recent years.

The world and his dog continue to wait for New York to crack. The hi-tech boom has prevented any setback although Wall Street and London, despite their heady progress, limped tamely behind the more buoyant emerging markets, with Nicosia in Cyprus actually leading the way with a staggering near 600 per cent advance.

Whether New York can retain its strength this year is the question bugging all share followers. If it avoids a significant relapse - and, providing there is not a long-running world crisis, I think it will - then London will remain on course for new peaks. Although the amount of institutional cash sploshing around the system is not what it was, there is still enough to ensure at least a steady flow of new cash into the market. And there are few worries on the economic front although, paradoxically, that could turn out to be a cause for concern. Higher interest rates - on both sides of the Atlantic - could be a restraining influence and another bearish factor is that many companies are still experiencing a tough trading environment.

Yet it is the real world of making and selling things which could lead shares higher this year with, I guess, Footsie stretching to around 7,300. Old-fashioned shares, such as brewers and retailers, have been the laggards in the 1999 boom so they offer plenty of room for recovery. Small-caps should continue to bask in the glow of their rediscovery.

We have grown accustomed to the market moving relentlessly ahead. But it must not be overlooked that long-term consolidation, or even a sharp correction, must occur at some stage. I would be surprised if it blights this year.

I like to keep readers up with events at companies I have tipped. I'm sorry to say retailer Era slipped out a profits warning just before Christmas and its shares are 7.25p against the 9.5p July tip price (see graph). I think we should hang on to them. But I suggest some profits should be taken on Motion Media, the Ofex- traded video phone group. The shares are now 800p against 90p when I drew attention to them in September.