Here we go again. It’s that time of year. The so called festive season is nearly upon us. We may not do all the pagan rituals that marked this bleak mid-winter time in the past, but we do like the ould bit of ritual all the same it seems. Soon the TV crews will decamp to Dubln Airport, as they do every year, to intrude and wallow in the emotion and high spirits as loved ones come home for Christmas, only to go back 5 days later to intrude and wallow in the emotion and low spirits as loved ones leave again. Some rituals don’t stand the test of time. When I was growing up there was a ritual of visiting all the churches to compare cribs – now there’s the 12 pubs!
Another ritual is that all the clever people start giving their economic and market predictions for the coming year; along the lines of “What does 2018 hold in store for investors?” There’ll be a lot of deep thinking and beard stroking as folks look deep into their crystal balls. You’ll notice a few things in these proclamations. There usually isn’t much reference to what was said 12 months ago, and there will also be a range of comments that are so general as to be reasonably useless. People will say things like “in 2018, selectivity will be the key!” Actually selectivity is pretty much the key every year. Another favourite is that market volatility is likely to pick up. This has been a refrain for a number of years. And today volatility is at epoch lows. So it’ll be right at some point.
Of course the really clever folk don’t do forecasts, they do “surprises”. They give a list of things that have some chance of happening but are not really expected to. This has a double benfit for the forecaster in that if it doesn’t happen, they simply say “well of course it was just an outside possibility”. And if it does happen – “Told ya!”
Personally I don’t get too hung up on the calendar year stuff. Many of the trends impacting on markets are blind to the changes in the Gregorian calendar and simply ebb and flow as always. Maybe best just to keep a weather eye on a few key things like credit spreads, valuations, debt levels etc. to get a sense of how exposed or protected we may be from the impact of the event that most likely none of the 2018 forecasts are actually talking about.
Tradewinds 