At the beginning of 2012 I was invited by The Scotsman and The Daily Telegraph to attempt the impossible and predict the FTSE close by Hogmanay. Despite my misgivings about the difficulty in predicting what would happen to what essentially is an asylum run by its inmates ..... for example the FTSE is dominated by what happens to the top 10 stocks, such as Vodafone , BP, or HSBC ..... need I say more ...... and the further skewing to average prices thanks to what's called (by "experts" the Capital Weighted Model)......... I suggested it would be a good year for equity investors.

Indeed, if you bothered to check, and I'm sure you've better things to do at this time of year, you'd see my prediction for the FTSE was that it would break through 6500, and probably stay there until the end of the year. So far so good as at the 27^th December, with the Index standing above 6700. And I was the only person asked by the Daily Telegraph to predict such a good year. So why was I so confident? Well much had to do with the consensus at the time of deep gloom. Remember the "Triple Dip Recession supposed to be round the corner? The Fiscal Cliff? The end of the world predicted by a Mayan Calendar? The end of the Euro? Debt Ceilings? Greece no more?

History is clear at such times. When the consensus is running screaming to the corner of the playground probability tells you to be brave .... well if it works for Warren Buffett ..... But what about 2014? Well here's what I sent on request to The Daily Telegraph, The Scotsman and finally FT.com.

Scotsman

"Last year we thought the FTSE would break through 6500 and stay there. Sentiment was bearish and expectations subdued.... good signs for Contrarians. Now it's different..... Sentiment's improved, Profits higher, and even Arch Bears are giving up. Mmmm. Meanwhile ace researchers Ned Davis in the US see rainclouds ahead, probably giving us a dreich Summer for stockmarkets, and point to various studies since 1928 to back it up.

So I'd keep with some caution, back quality, and be prepared to press the confidence accelerator next Autumn, probably when it feels wrong. FTSE at the end of next year? If we get to 7000 or more we've won a watch. But there's still value out there in Smaller stocks , basically all over the Globe. For those who love a punt , India looks interesting. And remember..... Greece was going belly up last year allegedly ...... What's the top stockmarket this year by Kilometres? Aye, you got it in one! Greece."

Daily Telegraph

"Last year I predicted the FTSE would go through 6500 and stay there ..... so far so good. But last year at this time Sentiment was poor especially thanks to US issues, not to mention Greece etc etc. And there was value everywhere, especially Small Caps .

FTSE so far , ignoring dividends is up over 10% , but thanks to Small/Mid Caps the FT250 is up over 27%, and over the pond the S&P 500 is up about 30%. Unconstrained funds have done even better. For Contrarians , as Bullishness expands lately ..... with even Perma Bears throwing in the towel.... 2014 looks like it could be a disappointment for Indices like the FTSE, especially with such a strong currency for some inexplicable reason.

7000 History and Cycles predict a mixed year, with prospects of a mid-year market fall not dissimilar to that of 2011 (possibly as much as 20% ... ouch). So I go for a small overall increase by end Dec 2014 on the FTSE would be a good result following what could be a bumpy ride. Better than that and we've won a watch !

........ Despite this cautious approach for somebody constantly being accused of being an optimist (I have been called worse ) I believe we're heading into a Secular Bull Market a la 1942/ 1982 , with 2015 looking very interesting for us optimists. For risk takers, Emerging Markets are rebounding, India looks interesting following the appointment of a new Central Banker, and judging by my 40 years experience of what happens after a crisis of any description in a market, sector, or country ....... (Greece is the best performing Stockmarket by far this year )...... if I could find a way to put some chips on the Philippines Stockmarket and shut my eyes tightly for a couple of years .................."

FT.Com

We think 2014 will be a more difficult year for investors' emotions, as probability suggests a topsy-turvy time, based on cycles going back to 1928. So the early part of the year could look promising, with a rough time of correction , then a back end rally, taking Equity Indices slightly higher despite the rollercoaster .....

Defensive Fund Choice

TM Darwin Multi Asset .... Which as one of our favourite goalkeepers has returned 12.25% over the last 12 months (Source Lipper). Lead manager is David Jane, whom investors may recognise as formerly Chief Investment Officer at M&G. David's objective is to give investors positive solutions like Capital Preservation and Real Returns, not by Index Benchmarking, but across asset classes to fit rolling risks. He designed the fund for his Mum who doesn't like nasty surprises, just pleasant ones. Good enough for me. Small fund, below £50 million, but with an experienced helmsman.

(Added note .... Remember what David did to Goliath!)

Aggressive Fund Choice

Invesco Perpetual Global Opportunities........ Managed by Stephen Anness who learned his trade behind Neil Woodford. I believe this is the kind of fund that will continue to benefit from the likely increase in Global Growth coming along, notwithstanding the expected trauma mid year. It's a good size too, at £130 million, and off most folk's radar. It's well spread geographically where growth is expected ... US, UK, Europe and 20% in Asia. Young up and coming manager worth following ... last 12 months' performance , up 36.55% (source Lipper).

All the best folks for 2014, but 2015 looks much better ..... if you're an optimist of course!