"Wall Street indices predicted nine out of the last five recessions!"

These somewhat notorious words were uttered by the famous 'neoclassical' US economist, Paul A. Samuelson, but perhaps they hint at the sometimes utter uselessness of the data when it comes to knowing where we are in a recession.  I have hinted in a previous blog entry at the usually undependable nature of media comment in this connection.

For what it is worth, below we provide a chart of the FTSE All-Share over the last 12 months, graphed relative to the FTSE All-World Index.

What do you make of this?  A period of outperformance, followed by a more extended slump in the FTSE relative to global markets hints at a specific weakness in the UK.  And yet, many of those FTSE All-Share companies are global players in their own right.  Do you conclude a buying opportunity in the UK?  Do you sit tight and stay in cash, or do you make the decision that you are an investor, irrespective of what the markets are doing?  Does one sit down with one's client and say - "Look, this is the way markets are.  For good or ill, this is the way they behave.  You can sit this one out, but the reality is that with inflation running at 5.2% and the best net deposit rate at 5.25% (basic rate assumed), that is no kind of long-term strategy."

We're in a recession.  It's not nice.  My reading is that 95% of pundits will simply whine about it - a particular specialty of mainstream media, as it sells papers (and there's no Olympics in a short while to occupy column inches).  But our clients still need to eat, to have a roof over their heads, to plan for the future, to make the best of what they have, to control risk and manage debt.  And that needs good financial-planners.

IFAs really should be amongst the 5% during a recession!