It is widely acknowledged that the outlook for economies and investment markets is unusually uncertain, given the huge political changes that we are witnessing across the world. It is also widely acknowledged that most assets are expensive and most likely are priced to offer sub-normal prospective returns. Why then is volatility (the VIX) so low? History tells us that periods of crisis are often preceded by periods of abnormally low volatility and complacency about risk and valuations. Are we in one such period?
In contrast to what is a relatively benign macro outlook, the starting point for key markets is more problematic. Thus achieving high real rates of return by simply hoping for strong underlying market performance would be optimistic.
Click below to see expanded view of things to look out for in 2017.