Northern Foods - a Tasty Choice!

wilkie - thanks. The purple colour is spreading up my leg and on top of my foot yet I am already walking around on it nearly normally. Uneven ground hurts but I reckon it will be sound for New Year festivities.

Well done on playing catch-up, MRP. Hope you keep the momentum going. Hats off to wilkie. That's a very good show. You are up in the territory Gateside was investigating. Who has taken the crown?


Well I've had an excellent week. A 1.0% rise today makes 2.4% over the 3 days. My long term holding in IBG picked up from the bottom of its recent trading range for about half of today's gain.

For the year, apparently the FTSE-100 is up 11% or a touch over 14% with dividends, housing around 10% and government bonds were largely flat. My late spurt lifted my 2006 return to 16.4% after some minor withdrawal of capital. If added back in with the dividends that I spent on top, it would be near enough 20%. My strongest memory for the year will be increasing my stake in SBT ahead of getting the US legislation wrong. This cost my portfolio about 6% when they collapsed, but they would have risen strongly had the legislation failed which would have added I estimate around 8%. My good year comes after losing 14% on US legislation! I hope to avoid taking such risks next year.

Whilst I entered this year fairly optimistic, but realising that the UK would likely underperform other economies around the world as it neared its peak, I consider that this year is going to be much more difficult. Whilst short UK rates rose a little last year, longer rates did not rise much until very recently. Both look set to continue rising this year, and I think the longer rates may have a significant influence on hedge fund financing this year. Given that they are heavily geared, I think the outlook could be distinctly choppy on financial markets where they have an influence. I also think the rising longer term rates will dry up liquidity and finally bring about the peak of the housing market. If you remove the healthy Q1, house prices probably did not rise above the real rate of UK inflation (much nearer 5 or 6% than the 2.7% CPI) for the rest of 2006, so the strong trend is already over despite what those with vested interests would have you believe. Outside the South-East many areas' real house prices have fallen Q2-Q4.

The recent strength of the £ on the back of rising rates will make life a little harder for exporters this year. Any signs of slowing growth in China and the far East will make for much more competition on prices for internationally traded goods, and I think UK exporters may have margins squeezed.

Government finances will detract from the economy this year. Despite a growing population and healthy growth figures, the government has managed to let its finances deteriorate, largely down to excessive public spending from trying to buy the last election. Without that spending, the economy is not as well as our chancellor has been leading us to believe. We should see this next year as the economy slows and unemployment rises. Taxes will have to rise and Gordon will be planning lots more sneaky ones for us next year which will add yet more red tape to the economy, driving jobs abroad.

My overall view is that much more money will find its way into building societies this year, whether directly or through tax-free savings vehicles. Houses and equities will lose some of their shine after a very good run. I suspect the stockmarket will not make any progress so dividends will come to be seen as more important as part of the overall return, so yielders should hold up better than growth/cyclical shares as has been the case in H2 2006.

After coming near the middle of my target range of 10-25% this year, I am only aiming for 0-10% next year in a market I think may fall a little. My main strategic aim will be to increase my dividend income from stodgy companies that will not suffer from rising rates and slowdown. In the weaker market, I hope to be able to avoid paying any CGT this year. Having made quite a lot of money in the last 4 years, next year I just hope to keep it.

Hope you all have a happy new year. Health, wealth and happiness to all.