Polar exploration has been a recurrent theme for Market Risk Insights over the last year or so, perhaps inspired by the parallels investors now face as they trudge out into largely unmapped territory featuring extreme financial conditions.
As we enter 2018, global stock indices continue to trek past record highs while investors – at least those with any sense of history – debate whether the outlandish ‘bull market in everything’ can rage on further.
Aptly, forecasting has become a game of polar opposites with both meltdown and ‘melt-up’ touted as distinct possibilities for 2018 by market pundits.
In the short term at least, most investors are expecting a temperate environment: not too hot, not too cold. Nonetheless, they must – taking a cue from the Norwegian explorer of the South Pole, Roald Amundsen – consider the likelihood of a number of future scenarios and plan accordingly.
And while investment markets may be less predictable than the weather or the feed requirements of Pole-bound sled-dogs, we can reasonably plot some of the danger zones ahead.