the UK economy looks buoyant with house prices moving up strongly. However, this is not necessarily a good sign as it may cause the Bank of England to raise interest rates further. Returns from the FTSE Mid 250 have been extraordinarily good: from the low of the stock market in March 2003 they are up over 180%. These companies do now look the most expensive part of the market so perhaps some caution should be considered and investors should remember that investments can fall in value as well as rise. The FTSE 100, the index of our 100 largest companies, looks considerably better value by contrast, especially the mega stocks such as BP. However there will need to be a catalyst to get these stocks moving; a break up of BP, or perhaps even a bid for Vodafone from private equity, might be just that.
