The Year Ahead - Sell Everything !

Finding out that I can indeed put my short BitCoin view into practice was a prompt for me to actually write down a number of views on the financial markets.

In the spirit of forecasting, as is customary for this time of year, I have concentrated on the more dramatic elements of my opinions.  These views are not as eye-catching as the Saxo Bank "Outrageous Predictions" (which I really enjoyed reading); indeed, some of my views are very mainstream.

Actually, "consensus" is one of the things I worry about in markets right now; this view itself is far from contrarian, of course !

If I consider the themes that concern me, I would pick out:

- Central banks ... are running out of policy tools.  I also believe that Central Banks have been intervening far too much in the capital markets, and that these large-scale actions will have unpredictable consequences, which are likely to be very messy.

- Currency markets ... will be a major source of instability.  This is a related point.  My view is that over-managing the economies will eventually lead to big problems, and that currency prices are the pure-play on those instabilities, whether in emerging or developed markets.

- Complacency ... will prove to be have been problematic in hindsight.  I have of course seen many plausible explanations for the high valuations in markets.  I think many asset classes are "priced for perfection" and for the reasons above, I think those valuations are fanciful.  Volatility has been far too low, for too long,

- Credit ... we are overdue for a correction / crisis.  Credit is certainly not the only over-priced asset class, but I do expect to see some large shocks ahead. 

- Consensus ... I agree with those who have pointed out that changes in market structure will mean it's going to be very chaotic when the consensus view on credit, equities, bonds etc breaks down.  In the worst case, if I am right to be concerned about Central Banks, then I suppose the collapse in prices could be more extreme that in the previous 2007/09 crisis.

I can clearly count myself among the doom-sayers.  I can easily imagine that at the end of 2015, I may look daft.  But I prefer that to NOT saying what I think and resorting to "I thought so ...".