Where did you hear about us?
The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

The Historic Ratios Achieved a 60% Success Rate in 2023

Peter Hemple uses historic ratios between major asset prices to estimate future prices

As we take our annual look at what has happened to the five major asset prices (the FTSE 100, gold, Brent crude oil, UK property and London property) over the past 12 months, and what the historic ratios indicate might happen this year, the predictions made a year ago were disappointing compared to the (profitable) predictions made in previous years.

While prices moved in the predicted direction for three of the five asset prices, the two ‘misses’ were more costly, as can be seen below:
◆ FTSE 100 to increase by 25.1%
(it increased by 3.5%) – CORRECT
◆ UK property to fall by 2.9% (it fell by 2.3%) – CORRECT
◆ London property to fall by 6.8% (it fell by 2.4%) – CORRECT

◆ Gold to fall by 17.6% (it increased by 13.6%) – INCORRECT
◆ Oil to increase by 10.9% (it fell by 10.3%) – INCORRECT

Overall, with equally weighted long/short positions, the historic ratios would have returned a loss of 3.1% last year, compared to a profit of 2.5% in 2022 and a profit of 10.8% in 2021.

If you have not read any of my annual articles on historic ratios before, the formula is relatively simple. I take the price of each asset at the end of every year for the previous 20-year period.

This gives an average price over the past two decades, which allows to calculate the average ratio between two assets, like gold compared to oil, or UK property prices compared to the FTSE 100 etc. 

Want the full article?