Our content this month are as follows:-

• Expected Returns, the Good News
• In the news
• Books we have read
• Quotes of the month

Whilst there has been an upturn in markets in recent weeks, the news over the past couple of years has been almost invariably bad. As we pointed out last month, our clients have suffered relatively little compared to others who have been exposed to investment strategies which have included commodities, private equity and hedge funds.

And even better news for our clients is that, according to a recent paper by David Booth, CEO of Dimensional Fund Advisors, the formula for calculating stock market returns (known as the "Gordon" formula) is now showing that investment returns in the future can be expected to be significantly higher than previously. In the US market alone, all other things being equal, we can expect future returns to average around 19% per annum. This is around 7% per annum greater than the average expected return in "normal" times and endorses the long-term strategy that we encourage clients to take; as we have said before, you have taken the risk over the last couple of years, it makes sense to stay in for the return.

Copies of David Booth's paper are available on request to vickie@indexwm.co.uk

With the Bank of England base rate at its lowest level for 300 years, the search for returns on cash continues to get the headlines. Please look out for our bulletin sent around the middle of the month, which finds the best available returns for various periods. There are also numerous headlines regarding the alternatives to cash, which should, of course, be ignored; many commentators and advisers would like us to believe that there are alternatives to straightforward cash deposits but invariably these alternatives carry additional risk as many have learned over the past 18 months. If you are holding cash, hold cash; if you have money available for investment, invest it in your recommended portfolio.

The Financial Times is carrying a series of articles by Anthony Bolton in which he is imparting his methods for selecting investments. On the face of it this appears to be very useful as Mr Bolton was that very rare animal, a successful fund manager. One of the questions that occurs to us is, surely Fidelity have already captured his methods, secrets and tricks of the trade for their other fund managers? They obviously have not, as an attempt to train two managers to take over his fund, failed miserably and his successor runs the fund in a completely different way to him. We have read Mr Bolton's autobiography in which he explains that often he does not know why he has selected a share for his fund! What is apparent to any student of his fund and which comes out in his article is that Mr Bolton was largely a "value" investor. Value has a part to play in portfolio construction but is certainly not the whole story; in addition, having read the article, it occurs to us that some of Mr Bolton's wisdom would be difficult to apply. For example, he recommends buying companies with complex or unusual capital structures, buying when the purchase does not feel "comfortable" and buying those with "asymmetric payoffs". Judgement is required in all cases and how and when to apply that judgement is the test that the vast majority of fund managers are bound to fail.

A biography is this month's recommendation. Those of you who have watched "Mad Men" on TV recently will know that it is set in the heyday of advertising in the late 50s and early 60s. The man who really put advertising on the map is a Scotsman who really was an Englishman abroad, David Ogilvy. His biography is written by a man who knew him very well, Kenneth Roman, a former chairman of the agency he founded, Ogilvy and Mather and is entitled, appropriately, "The King of Madison Avenue ".

A larger-than-life and extremely flamboyant character (he wore a cape and was driven in a Rolls-Royce when he first arrived in New York), Ogilvy is remembered as much for his aphorisms as anything else, the most famous being, "the consumer is not a moron, the consumer is your wife". It is clear that Ogilvy had remarkable leadership and salesmanship qualities as well as a genius for public relations and memorable phrases.

It is available from good bookstores and Amazon, but if you have any difficulty finding it please contact vickie@indexwm.co.uk.

"If I had asked my customers what they wanted, they would have said a faster horse."
Henry Ford

"99% of fund managers demonstrate no evidence of skill whatsoever".
William Bernstein, author of The Four Pillars of Investing