Personal Finance: New Year? Give me the old one

That Was The Week That Was. Those of you of a certain age are likely to remember this programme with affection.

Millicent Martin trilled the week gone by, with flesh put on the stories by figures so far removed from the Establishment in those days that it is difficult to remember they were then outsiders. How swiftly the values of that team - Frost, Sherrin, Levin and Rushton - have become not just normal but appropriate for the age. They would have relished examining 1997.

Their approach would undoubtedly have been irreverent - singularly fitting for a year where nothing was ever quite what it seemed.

For example, we all knew an election was imminent. As polling day approached and it became evident that John Major was not about to win a further term, markets dipped, only to recover as a borderline result began to look unlikely. In the event, the majority was one far beyond anything achieved by Maggie Thatcher, even in 1983.

The size of the Labour win was a factor in maintaining a relatively stable market, though one which seemed unable to make any headway ahead of the first Budget from the new Chancellor of the Exchequer, Gordon Brown. Here, market commentators made the first of many misjudgements of this year.

Action against pension funds had long been expected. Debate in the City ranged around how much the market would fall on, say, tax reclamation being limited to 10 per cent or eliminated altogether.

In the event, the worst happened - and the market went up. I suppose if you signal bad news sufficiently far in advance it can be a relief to receive it. Even so, it still seems remarkable that the yield on UK equities could have been cut by so much for so many investors and still the market was able to brush it aside.

But the greatest surprise must have been the continued strength of the US, despite brief Asian-inspired wobbles. But more buying interest than selling panic was generated among retail investors. The continuing enthusiasm for indexed funds led to large capitalisation US indices to deliver strong performance while smaller companies remained in the doldrums.

The situation here was little different. The FTSE 100 index is now heavily dominated by banks and financial services companies. Meanwhile, the investment banking world was hit with the decision of NatWest and Barclays to withdraw from the fray, leaving the field clear for their American and European counterparts.

Can 1998 be as exciting? Probably, yes. But it is unlikely to be as profitable.

Brian Tora is chairman of the Greig Middleton investment strategy committee.