Being
right
is
very
profitable,
and
being
right
about
unpredictable
events
is
even
more
so.
That’s
why
the
news
agenda
always
manages
to
surprise
money
managers
and
journalists.
Too
many
of
the
asset
managers’
forecasts
this
year
tell
us
to
look
for
the
“black
swans”
we
should
look
for;
but
as
Nassim
Nicholas
Taleb
would
say,
these
are
events
we
don’t
foresee.
“Hunting
the
black
swans
is
a
fool’s
game,
because
rare
and
catastrophic
outlier
events
are
unpredictable,”
Morningstar
Investment
Management
experts
wrote
in
their
2024
outlook.
In
fairness
to
investment
banks
and
brokers,
they
are
starting
to
keep
scores
rather
than
pretend
their
forecasts
last
year
didn’t
happen.
Professionals
should
have
a
better
track
record
than
the
rest
of
us,
but
they
rarely
have
100%
records.
Broker
Liberum
even
addressed
this
in
their
2023
review:
“looking
back
to
2020
when
we
started
this
exercise
in
public
self-flagellation
(aka
performance
reviews),
our
hit
ratio
is
averaging
a
very
respectable
63%.”
All
that
said,
sometimes
it’s
the
things
that
don’t
happen
that
can
surprise.
These
are
less
dramatic
than
unexpected
events,
of
course,
but
still
have
a
substantial
market
impact.
But
on
the
flipside,
investors
have
enough
to
worry
about
–
the
“wall
of
worry”
is
high
enough
without
building
another
layer
of
bricks.
Bitcoin
Didn’t
Collapse
Those
who
remember
the
dotcom
boom
at
the
start
of
the
new
millennium
will
recall
how
it
felt
like
that
bull
market
would
never
end.
But
when
it
did
the
capitulation
was
mighty,
with
billions
wiped
off
stock
market
valuations.
No
one
could
imagine
that
“internet”
companies
could
ever
be
popular
again.
It’s
taken
10
to
20
years
to
rebuild
that
sentiment
and
wipe
the
slate
clean.
The
time
in
the
wilderness
was
a
long
and
lonely
one
for
tech
companies,
but
they’ve
regained
prime
position.
It
felt
like
the
great
capitulation
for
Bitcoin,
and
by
extension
the
crypto
industry,
at
the
end
of
last
year.
The
Economist
ran
a
cover
in
November
2022
headed
“Crypto’s
Downfall”
and
FTX’s
Sam
Bankman-Fried
was
arrested
in
December
that
year.
In
the
US,
the
Securities
&
Exchange
Commission
went
on
a
war
footing
against
the
crypto
industry.
Fast
forward
a
year
and
SBF
is
now
in
jail
(though
for
how
long
remains
unclear),
and
the
other
crypto
mogul,
Binance’s
Changpeng
Zhao
(CZ)
has
resigned
and
is
awaiting
sentencing
for
money
laundering
violations.
Somewhat
counterintuitively,
price
of
Bitcoin
has
risen
$27,000
(£21,197)
this
year,
or
162%,
to
$43,000.
The
background
has
been
a
return
of
risk
appetite
among
investors
generally,
talk
of
a
Bictoin
exchange-traded
fund
in
the
US
and
the
growing
sense
that
regulators
would
rather
have
the
industry
inside
the
proverbial
tent.
Regulators
love
to
regulate,
even
though
the
UK’s
financial
watchdog
is
still
insisting
crypto
is
a
mixture
of
scam
and
gambling
(#scambling).
As
AJ
Bell’s
head
of
investment
analysis
Laith
Khalaf
points
out,
increased
regulation
may
be
a
positive
for
crypto,
“potentially
opening
up
fresh
pools
of
capital
and
fostering
greater
confidence
amongst
consumers”.
He
adds
other
fundamental
factors
may
be
at
work
in
the
recent
bull
run,
including
a
“halving”
this
year
in
the
amount
of
coins
mined.
He
senses
we’re
on
the
brink
of
another
one
of
those
media-fuelled
crypto
frenzies,
but
warns
investors
about
the
dangers
of
plunging
in
at
this
point.
“In
the
long
run
the
widespread
adoption
of
crypto
as
either
an
asset
or
a
currency
is
still
highly
speculative,
and
as
a
result
prices
can
be
expected
to
remain
incredibly
volatile
and
heavily
influenced
by
sentiment,”
he
says.
Where
will
the
Bitcoin
price
be
this
time
next
year?
With
the
proverbial
gun
to
my
head,
I
would
guess
higher
but
I
wouldn’t
have
the
courage
to
put
my
own
money
behind
that.
I
felt
the
same
last
year,
of
course,
when
Bitcoin
had
dropped
below
$20,000!
The
UK
Government
Just
About
Avoided
Implosion
In
our
look
at
some
of
2023’s
mad
financial
numbers,
we
noted
a
66%
decline
in
UK
prime
ministers
this
year,
a
figure
so
stark
thanks
in
part
to
the
political
chaos
of
2022,
but
also
2023’s
relative
stability.
But
the
word
“relative”
does
a
lot
of
heavy
lifting
there.
This
year
the
government
still
found
itself
in
repeated
scandals
over
everything
from
immigration
to
environmental
policy.
The
reshuffles
went
smoothly
enough,
but
there
is
now
every
sense
the
Conservative
Party
is
no
longer
an
organisation
of
centre.
The
sands
of
politics
are
now
shifting
once
more,
as
evidenced
by
this
year’s
bruising
by-election
results.
How
much
remains
to
be
seen
at
the
ballot
box.
Moreover,
despite
managing
to
fulfil
his
pledge
to
halve
inflation
by
the
end
of
the
year,
Rishi
Sunak
failed
to
go
a
year
in
office
without
facing
the
threat
of
being
unseated
by
plotters
from
his
own
party.
Perhaps
this
year
the
prime
minister
will
be
counting
his
lucky
stars
it
wasn’t
a
lot
worse.
Still,
there’s
always
next
year,
when
an
election
will
likely
provide
more
high
drama.
With
the
clock
ticking,
it’s
when,
not
if.
China
Didn’t
Invade
Taiwan.
Why?
At
a
financial
crime
conference
in
London
earlier
in
2023,
various
risk
managers
and
regulators
were
keen
to
suggest
that
this
time
they’d
be
ready
for
an
incursion
by
a
foreign
power
into
sovereign
territory.
Having
been
blindsided
by
Mr
Putin
in
February
2022,
they
weren’t
going
to
be
surprised
again.
Attention
turned
further
east.
China’s
invasion
of
Taiwan
was
believed
to
be
imminent
–
my
Asia
colleagues
remind
me
this
has
been
“imminent”
for
decades,
it’s
just
the
West
has
only
just
paid
attention.
So
a
“grey
list”
of
Chinese
companies
was
already
being
drawn
up
for
sanctions.
2023
fortunately
didn’t
see
this
threat
materialise.
Sadly,
as
problems
tend
to
multiply
rather
halve
or
disappear,
the
world
now
has
two
seemingly
intractable
regional
conflicts
to
handle
as
the
year
draws
to
a
close.
Can
it
handle
three?
Trump’s
possible
comeback
may
be
an
added
risk
factor
here,
given
his
shall-we-say
unconventional
approach
to
international
relations.
The
investment
bank
outlooks
we
looked
at
were
not
exactly
keen
to
mention
this
directly,
preferring
to
highlight
“geopolitical
tensions”
and
“US-China
relations”
over
what
many
see
as
the
insanity
of
a
repeat
of
2016-2020.
Ron
Temple,
chief
market
strategist
at
Lazards,
is
an
exception,
suggesting
this
risk
is
very
much
a
live
one.
But
he
notes
February’s
elections
in
Taiwan
could
be
a
turning
point.
“As
China;s
military
increasingly
agitates
the
island
state
and
other
neighbors
in
the
South
China
Sea,
support
for
arming
and
defending
Taiwan
has
increased
in
the
United
States,”
he
notes.
“One
key
risk
in
the
region
is
that
China
has
to
date
refused
to
establish
military
hotlines
or
other
measures
to
avoid
escalation,
as
the
Chinese
leadership
fears
that
facilitating
such
communication
almost
encourages
future
US
intervention.
“As
such,
the
world
will
watch
the
results
of
the
February
Taiwanese
elections
carefully
for
signs
of
whether
the
situation
might
escalate
further,
or
head
in
a
more
benign
direction.”
For
those
who
play
the
board
game
Risk
at
Christmas
rather
than
Monopoly,
what
would
you
(as
China)
do
next?
It
could
perceive
the
US
is
distracted
with
the
Israel-Hamas
conflict,
or
calls
from
Ukraine
to
keep
supporting
its
efforts
against
Russia.
On
the
other
hand,
relations
between
the
US
and
China
seem
to
be
on
a
level
after
a
meeting
between
Joe
Biden
and
Xi
Jinping
in
November.
For
now,
you
could
be
forgiven
for
thinking
this
issue
is
at
best
in
an
importance
lull,
though
that
would
of
course
be
famous
last
words.
To
the
Taiwanese,
the
worst-case
scenario
still
feels
very
real.
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