Here's our Highly Placed Professional's 2014 predictions.
Predictions for the year ahead are always tricky for us market pundits.
Last year I was right in a rather depressed and feeble fashion. What I mean is, I didn’t say buy X and it would go up 50%. What I did say was that volumes of business would shrink as Europe (and the rest of the financial world) calmed down and that shares, property and other precious assets would soar as precious metals lost their lustre. Seeing as how I went and bought gold during the second crisis I was not talking my book. But I was right!
The problem with being right on this occasion, however, is that I made not a sou myself. It has been much harder to get business done as the fixed income investment world is a lot quieter, and sadly I was very defensive a few years ago and that has not helped me. But I did buy property (well one) and kept the day job, so I guess I am still ahead of the game.
So here’s my predictions for next year:
Metals will continue to suck wind, the Fed will taper off economic stimulus but it will be a 'taper lite' which won’t freak the markets out like in the summer.
More people will lose their jobs in mainstream markets, but people in boutiques and in specialised areas like internet IPOs will make out like bandits.
Bond yields will rise as we realise that central banks simply cannot cut rates any more, and the shape of yield curves will steepen a lot more. The effect of this will be bad for emerging markets, which may have had their day in the sun, but European peripheral markets will increasingly be seen as safe, albeit with the ECB supporting them - yes 'we’re all in this together', Mario.
But I have one word of warning, and a lot of you won’t want to hear it.
We have learned nothing from the last crisis. London housing is not a one-way bet, and prices are already unaffordable for the average professional. I think there are hot spots in London that will continue to do well as their potential is realised a la Elephant and Castle, for example. But beware the Notting Hill toffee nose who thinks he is sitting on a £5m fortune just coz he bought some 3 bedroom terrace houses 5 years ago. Don’t go playing that game coz it’s as easy to lose a fortune buying the wrong place at the wrong time as it is to lose a forune investing with Madoff.
image: © Dan Moyle