Recovery presents a new future of both risk and opportunity

THE dawn of a new decade is an ideal time to reflect on where we have travelled, the lessons we have learned and to think about how we might make progress in the coming years.

If we think back ten years to the technology bubble it is difficult not to be reminded of how the concept of easy money prevailed.

This was immediately followed by a three-year bear market. More recently, we have experienced the even bigger and perhaps more destructive bubble in property markets, where once again the easy money belief prevailed, only to subsequently falter. These are clear examples of history repeating itself, or at least the inability of many of us to learn from our mistakes.

Moving forward to the present day, we are enduring an as-yet unquantifiable financial debacle, often identified as securitisation. In simple terms, it involves the packaging and selling on of liabilities. Such practice has led to the universal vilification of bankers which, while understandable, perhaps ignores the fundamental point that the real architects, or facilitators, of this catastrophe continue to hold positions of power and authority. The forthcoming general election can be assured of unprecedented attention from the global investment community.

So how should investors view the coming year and seek to position their portfolios to avoid giving back hard earned gains? With a current backdrop of confident predictions that the UK is exiting recession, that "the worst is over", it is worth remembering that such pronouncements are largely based on the massive quantitative easing programme that has been undertaken.

The UK has been printing money like never before, and to my mind it would be fanciful not to believe that there is a considerable price to be paid by us all as a result. Only once has such an exercise been implemented outside of the classroom, in Japan in the late 1990s. The outcome there was that it worked… until it didn't. So it remains uncertain as to whether the current stimulus packages will deliver sustainable economic growth or a re-run of the Japanese lost decade.

We need to be mindful that over the past decade, most major equity markets delivered negative returns, while over the same period more astute investors delivered superb positive numbers. The coming decade will, in my opinion, be little different.

To achieve further investment growth will demand an understanding of the changing world and to embrace opportunities which will be offered up. For those who lack the time or perhaps confidence to make their own investment decisions, this should be the year in which they resolve to seek out professional advice and guidance, to ensure that hard-earned gains are guarded and, where possible, enhanced. This implies looking beyond the traditional point of sale model of advice, and seeking to develop an ongoing relationship with an adviser who aligns his interests with yours in order to make the very best of your finances. Over the coming years, this might just prove to have been one of your smarter decisions.

• Ken Taylor is director of Mackenzie Taylor Wealth Management in Nairn.