Practical analysis for investment professionals
09 January 2015

Weekend Reads for Investors: Market Forecasts, the Wall of Worry, and Oil

Posted In: Weekend Reads

Fund managers are generally an optimistic lot, especially in the midst of a bull market, but even more so at the start of each new year. The turning of the calendar has become a popular time for introspection, an appraisal of what might have gone wrong — a lot for active managers in 2014 — and, unfortunately, predictions.

The ubiquitous “Top Ten” lists, while generally entertaining and occasionally thoughtful, are as much marketing pitches as they are serious reading. Byron Wein did not disappoint this year and his 2015 prognostications include a resignation from Russian president Vladimir Putin and a strong comeback for US high-yield debt.  For his part, Janus bond fund manager Bill Gross, CFA, recently declared (not for the first time), “The good times are over.”  Previously, Wall Street Journal columnist Jason Zweig pointed out the marginal utility of annual forecasts, echoing the advice of the late economist Edgar Fiedler, who once said, “If you have to forecast, forecast often.”

As 2015 begins, global equity markets face the proverbial “wall of worry.” The strengthening US economy stands in sharp contrast to ongoing malaise in most of Europe (and renewed worries of a “Grexit”), recession in Japan, and a slowdown in China and emerging markets. Commodity prices, most notably oil, reflect both a supply glut and slackening demand, and this weakness is hammering the economies of Russia and most other oil-producing nations. Geopolitical conflicts show no signs of abating, and the strong dollar will pressure the revenues and margins of US multinationals.

Stock market investors have come to rely on the support of accommodative central banks and, for now, a safe forecast seems to be for more of the same in the year ahead.

Below are some other stories that caught my eye in recent weeks.

Strategic Thinking

Shareholder Values

Oil Patch

Disruption and Innovation

The Future of Finance

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©

About the Author(s)
David Larrabee, CFA

David Larrabee, CFA, was director of member and corporate products at CFA Institute and served as the subject matter expert in portfolio management and equity investments. Previously, he spent two decades in the asset management industry as a portfolio manager and analyst. He holds a BA in economics from Colgate University and an MBA in finance from Fordham University. Topical Expertise: Equity Investments · Portfolio Management

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