At this time of the year newspapers are filled with predictions for the months ahead. The one prediction I can make with confidence is that they are mostly going to be wrong. Trying to forecast a market's level in a year's time uses up plenty of column inches but is really just a matter of pure guesswork.
Before I am called a hypocrite because I have done it myself, I have always told editors that they should take any forecast with a pinch of salt. However, from a private investor's point of view, market predictions can be quite interesting: in fact, they can actually be helpful. Why? Because if you can find a real consensus amongst the experts, you can often find the very thing not to do!
I note, for example, that many are keen on emerging markets this year. So am I, although I have been a fan of this sector for over 20 years and remain very positive over the longer term. Nonetheless, in the last couple of days I have grown a little wary of the sector in the very short term.
Valuations, as yet, don't look too demanding but the fact remains that they have had a tremendous run from the lows in 2008. (In some cases markets have risen 100 per cent or so.)
I would therefore suggest that if you are keen on this area you do one of two things: start a monthly savings plan, which will even out the fluctuations in the stock market over time; or, for those of you who want to invest a lump sum, why not just wait a little. With experts such as Mark Mobius from Templeton Emerging Markets suggesting a 20 per cent fall at some stage, that will be the time to invest.
Instead, might it be that the developed world surprises on the upside? Everyone has written off Europe, the UK, America, and obviously Japan, but in stock market terms they might do better than you first think.
The UK is a perfect example with the economy looking absolutely dreadful. If I had a brick laying next to my sofa at home, I probably wouldn't have a television anymore judging by the amount of time I spend screaming at the senseless politicians who talk about nothing other than how to spend money they don't have.
Sterling has had its biggest fall since we left the ERM in 1992 and, having just come back from holiday, I can certainly confirm that going overseas is very expensive. When a steak costs $25 in a very mediocre Australian restaurant, you know something is up.
However, a weak pound might not be so bad for the UK stock market where three quarters of earnings comes from overseas; there could be an increase in profits simply through the deterioration of sterling. It is therefore essential to divorce the stock markets of the world from their economies, because they can behave quite differently. Combined with the huge private sector cost-cutting that we have already seen, the fall in the pound could well provide hope for the UK stock market.
One area I think is particularly cheap within the UK market is blue chip, defensive shares. UK income funds have been hit hard over the last two or three years, yet funds such as Newton Higher Income yield some seven per cent.
The likes of Invesco Perpetual High Income, among others, are full of companies that will not only survive but prosper through a difficult recession in the UK. I believe they deserve, and will achieve, a re-rating. So don't write off the UK and put all your money in emerging markets just yet.
The UK is a cheap area and, on a global basis, so too are the big, blue chip defensive shares on high yields. Over the next few weeks you will see one or two funds in my column that reflect this theme.
Mark Dampier is the head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more information about the funds included in this column, visit www.h-l.co.uk/independent