It is that most wonderful time when asset managers publish their expectations for the coming year. As the prospect of reading through the numerous tomes can feel daunting it is worth bearing in mind two important details: 1) Predicting what will happen in financial markets over the next 12 months with any level of consistency is impossible. 2) All of the pieces will (pretty much) say the same as each other, and also in the same way they do every year.  So, as a time saver, here is what they will all say:

– Expect higher volatility: I cannot remember an asset manager ever expecting lower volatility in the future. Volatility brings the allure of opportunities for active management and a reason for the reader to worry (and an implicit reassurance that the writer’s firm can provide a steady hand on the tiller)

– Investors need to be nimble: This is the asset allocators’ version of ‘a stock picker’s market’.

– Investors need to be selective / discerning: A stock picker’s market.

– The traditional approach to portfolio management might not work anymore: Just in case a reader is investing in an old fashioned, unsophisticated way.

– Economic growth will be fine (but with some downside risks): This must be the case because 1: Economic growth is usually solid in any given year and 2: It is not a great idea to tell clients that there is a recession looming.   

– Prevailing performance trends are likely to continue: The safest bet is always to say that what has been working recently will continue to perform well next year (US exceptionalism for 2025). This makes readers feel comfortable and plays on the propensity of markets to trend. It is important, however, to mention something about the potential for a ‘broadening out’ or ‘reversal’ – just in case.

– Alternative asset classes look attractive: Coincidentally, they also happen to have high fees and are difficult to replicate passively.

– A current key structural theme will impact markets: It is important not to be negligent of the critical secular theme that will change everything (AI next year).  

– A current key cyclical trend will impact markets.  It is important not to be negligent of the critical cyclical trend that is on everyone’s mind right now (Trump next year).  

– We should be worried about a loosely-specified tail risk that the market is obsessing over: There is always some tail risk that is concerning investors – it needs to be mentioned even if nobody is quite sure if it is a genuine risk or what to do about it (fiscal sustainability next year).

– Equities will perform well: This is both likely to be true in any given year and avoids panicking readers.

These annual documents are generally a good, tangible reminder that we are hopeless at forecasting and that financial markets are always a rotating cast of salient topics that feel urgent in the moment but have little predictable bearing on long-term outcomes.

To the extent that short-term issues matter at all, it will be the ones that nobody is expecting that will have a significant market impact.

If read for what they are – a gentle sales pitch with some interesting financial market observations – they are harmless enough, particularly if they, somewhat inadvertently, encourage readers to stay invested over the long-term. But we certainly don’t need to be acting on them and rest assured nobody will remember anything that is being foretold now in 12 months’ time.

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My first book has been published. The Intelligent Fund Investor explores the beliefs and behaviours that lead investors astray, and shows how we can make better decisions. You can get a copy here (UK) or here (US).