Bullish Buxton: 'FTSE to gain 20% in 2011'

With 25% government cuts starting soon, why did he buy into Debenhams and Home Retail? What does he know about economics or what will happen next year?

Another overpaid average fund manager hyping his fund and group by giving a forecast for future stockmarket gains which is probably not worth the paper it is written on except to increase sales.

Too easy to replicate the index make many mistakes and still gain big profits at savers expense by underperforming.

Richard Buxton expects the FTSE to gain 20% over the course of 2011?

The FTSE will be range bound between 4800 and 5800 for the rest of 2010?

Since the difference between 4800 and 5800 was 20% when I went to school I presume that if the FTSE ends 2010 on 4800 and ends 2011 on 5800 is projections will be spot on.

M&A activity is likely to create more jobs? Oh really? It seems strange to me then, that many of the companies I have observed which have merged or been acquired have been the subjects of the adoption of more efficient technology, elimination of duplicity, and asset stripping.

Two years down the line I expect the banks to be buying back their Govt' stakes? I am not in a position to comment, but Vince Cable is!

Next Plc. Would I follow his recommendation to invest? Quite frankly no. Looking from the top down: The price of cotton is increasing rapidly due to crops being devastated by floods in asian counties, internal inflationary pressures in China are growing, and western Governments are beginning to scrutinise the effects of cheap textiles being dumped in a market which their own industries cannot compete. Looking from the bottom up: My research indicates, viz, shopping for clothes: Next offer a very narrow range which targets those who are financially challenged. Their business model relies on high sales volumes which can only be achieved by accepting low profit margins. I think the market is saturated and we are in for a period of drying out.

Sorry, I take back what I said about RB being an average fund manager. He has outperformed in the past, but my concern is his making this questionable forecast and stockpicking for the future. Betting on a recovery with many years of cuts seems risky, if profits falter then stocks could be over-valued. A banking crisis and huge debts both government and personal does not give a "normal" recession: there could be several years of pain.

Let's hope preparations for the Olympics pan out better than in Delhi, or it'll be a feelbad factor.

re. Hotrod - agree with all your comments.

I shall be comparing this fund with M&G Recovery and Marlborough Spec sits. etc. in next year to see if we are right. Of course with 100% pa turnover usual in these funds, what Buxton changes to in next few months may bear no relation to his stated views and stocks in this article.

He thinks they are already pricing it in? ehh? In a double dip the FTSE price would go down to maybe around what it went to last year, a low of 3500. I think the title of this article should be City Boy Buxton talks up market. He knows that in a sentiment driven market talking it up is the most important thing.

The rights issa WAS NOT 50p !!! get the facts right before posting articles please. Such a basic fact wrong.....can assume whole article is rubbishhhhhh!

His stock picks on the whole look pretty sound as does his belief that a double dip is already priced in. Sentiment is being driven by the long bond- short equity brigade who are doing their best to keep this trade going. Bonds are set for an implosion and equities will be the main benificiary of this as equity yields are more attractive and the risk to dividends diminish further. As the bond muppets are proved wrong wrt to the economic direction over the next few months equities can be expected to rally. As I have held most of his picks since March last year I dont have any beef with his picks per se. The exception would be Next which has moved from a trend setter to a budget trend follower. The trend setters thses days are companies such as Supergroup and even Primark particularly amongst the well-heeled young.

Sorry, I can't see the point in investing in the UK All Companies sector if the funds are only returning 8% over the year to date. Asia Pacific (excluding Japan) and Emerging Markets, which Citywire this morning said are not as risky as they appear, can probably treble that.

Debenhams and Argos and Next may be familiar to everyone, but that's not a good reason to invest in their shares. And why is Mr Buxton not concentrating on UK companies which are performing, like Weir Group, Abcam and Dialight?

Joe,

You will be right over equity recovery in the end, but are you being too confident over the speed of the recovery and bond yields? 25% cuts havent even started yet and banks are still clearing their balance sheets.

I think slow growth at best wont do much for UK generated profits in cyclical domestics like most retail and construction . Too late for Olympic bandwaggon?

I agree the big party for bonds is over after last years wonderful 15%, they now have returned to their former role as income generators with capital risk, albeit lower than equities. (bond funds lose 1-2% in fees for a start).

Not enough money circulating yet for domestic inflation, but when interest rates do rise eventually then as you say bonds are bad news, however I think there is plenty of time before then.

Could Citywire be the go between and ask him if he is ready to bet some of his money on his forecast? I am ready to take him on.Enough of people like him making wild guesses in order to attract investors.

John Hi. I agree timing is everything. That said I believe the Fed will do what is needed to stop the US economy going into a Japanese style cul-de -sac and avoid deflation so interest rates will move slightly higher when the risk of stalling a recovery has subsided. Furthermore I expect the mood to change if and when the Republicans regain control of the House. This too will have a positive impact on the Dollar which should see a softening in commodity prices and thus ease the inflationary impact. So yes a "Goldiloks recovery" is thus quite possibel in my opinion. All this should be good for equities. The last coupld of years have seen many companies large and small deleverage as a result of which they are capable of making more out of less. Unit profitability will become increasingly apparent allowing compenies to return cash to shareholders even in a modest recovery. The banks despite the lefts best efforts will become quickly over capitalised and will have the whip hand when it comes to watering down the reforms currently being considered. The markets are relatively illiquid at present as a great deal of money is sitting on the sidelines earning a negative return with institutional fund managers terrified about having their faces ripped off through the volatility. The brave will see through this and reap the rewards and look to the high yielding quality plays now rather than wait for the bond market to crater first- In a world dominated by derivatives and ETF's a smooth transition from one investment strategy to the next is unlikely to be slow and orderly so I am happy to add now and ride out any volatility that is still left on the downside. Given that the FTSE recovery we have seen since the March lows of last year has been largely down to strength of commodities I would, not be surprised to see sector rotation accompany any rally of the Dollar.

Joe,

Thanks for taking trouble to explain all that, points noted, we must be ready for a proper market recovery but I still think it may take longer to emerge with no end in sight. Whatever happens in US, UK economy still sick with too much debt which after a banking crisis takes some time, possibly another year or two, to unwind. Cost cutting in companies does not increase discretionary sales when consumers are staying at home or unemployed and banks are buying gilts rather than lending. Therefore am still keeping away from home-based economy-sensitive cyclical stocks in the meanwhile for above reasons and am not surprised Buxton has burnt and will continue to burn his fingers on these.

However to be fair to Richard Buxton he has got it right in the past and retail and housebuilders are a relatively small part of his portfolio.

I think the next rotation is likely to be elsewhere and agree there is better value at present in export orientated high earners and overseas higher growth markets.

I feel very sad that pensioners without final salary schemes and next generation are likely to be poorer in many ways as result of actions of last government and this present crisis, but that is subject for another discussion elsewhere.