Still, bearing in mind the woeful performance of economists’ predictions in 2022, it is worth considering the risks to the current consensus. One possibility is that we are underestimating the severity of any 2023 downturn. Because of the reflexivity that kicks in as economies contract, we have seen this pattern many times before. Perhaps something will break in financial markets or – more likely – the weakness in property markets will prove systemic. For their part, central banks are ignoring the “long and variable lags” in monetary policy. But perhaps the most under-priced risk is to the upside – that the global economy proves more resilient than everyone expects. In fact, given the large distortions in the economy, we would not rule out the unscheduled return of Goldilocks. She is not going to stick around for long, but perhaps long enough to provide some welcome respite for investors.
There are less than two weeks of trading left in the year. 2022 has been a year that delivered dual losses in both bonds and equities. If anyone has highly appreciated assets they were thinking of taking profits in, then selling major underperformers to harvest tax losses has been a major theme in the last few days.Click HERE to subscribe to Fuller Treacy Money Back to top