That will of course to some extent depend on the risk appetite of particular clients, but if we take anything around the mid-range of appetite as the starting point the question is very much worth asking.
There is a very mixed picture emerging, and compelling arguments can be made both for a scenario whereby investors enjoy a prosperous year, or a very hard one.
Take the prospect of rising interest rates, which is perhaps the most significant issue faced by investors. It can be viewed in two very different ways depending on your confidence in the global economy and gauging of macro risk.
The sunny scenario is that if the Federal Reserve feels able to raise rates it means it believes both the domestic and to some extent the global economy is strong, and key economic indicators are robust. The other way to look at it though, is that rising rates will cause volatility and possible turmoil in credit markets as investors all rush in the same direction through rather narrow looking doors.
Europe is another example of a big two-way issue. On the plus side, Mario Draghi has left the possibility of further quantitative easing on the table. European equities markets have responded very enthusiastically to QE so far and more of the same should add fresh momentum. On the negative side of things, there are gathering storm clouds across Europe politically which could shake confidence, while it could be argued the QE rally has been overdone and company fundamentals have not kept up in many cases.
There appears to be no major asset class or aspect of financial markets that is unambiguously good as this year draws to a close.
For those looking to add risk and increase the potential for returns there are some relative bright spots however, with Japan shaping up to be the first place to look.
