There will have been a few experts patting themselves on the back when the FTSE 100 breached 7,000 in March.
That landmark was predicted at this point last year despite 2014 having brought an overall loss for the FTSE 100. The index started 2015 at 6,560, passed its record level from 1999 in February and hit a new closing high of 7,104 on April 27.
The trend since then, however, has been downwards and punctuated with a sharp dip, and only partial recovery, following China’s Black Monday in August when global markets stumbled.
At its current level of 6,102, the blue-chip index now looks likely to post a fall for the second calendar year in a row.
A difficult year: The FTSE Index has fallen steadily after hitting a new peak in April.
This weakness was forecast last year and a look back at predictions published then by Telegraph Money shows there, although most guessed at modest gains, there was pessimism that the past year has proved right.
Richard Buxton, who manages the Old Mutual UK Alpha fund, said a year ago that the FTSE 100 would break its previous record, but that a prolonged slowdown of company profits would make gains difficult to achieve.
Profit warnings and dividend cuts have continued in 2015 and Mr Buxton now says weakness among industrial companies, which have been hurt be commodity price weakness and slower growth in China, is likely to hold stock markets back.
“Profit warnings and earnings downgrades from industrial companies worldwide abound, with manufacturing surveys pointing sharply south,” he says.
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He adds, however, that a more positive scenario could play out if the present industrial weakness turns out to be a one-off correction in response to falling demand from China.
If so, “then the surprise for next year could be that the resilience of the consumer and services sides of Western economies more than offsets manufacturing weakness and growth is steady if unspectacular”, Mr Buxton says.
A characteristic of the current market, he adds, is a reluctance among investors to back companies unless they have growing profits. This has hurt “value stocks, recovery stocks, commodity stocks and mega-cap stocks” he says, and there is “no appetite whatsoever to ‘catch a falling knife’”.
Another of last year’s predictions came from Alastair Mundy, who oversees the Temple Bar investment trust and a number of funds for Investec.
Last year he said: “We see a number of concerns around the world. These concerns range from geopolitical worries to fairly disappointing earnings growth for companies worldwide.”
“These factors suggest equity valuations should not be as high as they are,” he added. See current market valuations below.
It’s a similar story this year as well. Mr Mundy said: “We believe that equity market valuations are currently high and at levels from which they have fallen historically. Valuations at these levels increase the market’s susceptibility to external shocks, as recently felt from China.”
He says that investors could be being too optimistic about the path for interest rates, with deflation still a potential threat to company profits.
“We think the central, consensus scenario of interest rates rising slowly, as global growth recovers, is at risk of being questioned,” Mr Mundy said.
A more optimisitc view comes from Nick Peters, a portfolio manager with Fidelity Solutions. He said: "One can paint a relatively supportive picture. Wage growth is now outstripping inflation and is likely to continue doing so, given low levels of unemployment. This should help to support consumer demand, though this is admittedly more important for the more domestically focused FTSE 250."
He sounded a note of caution, though, that markets could be spooked by political events. He added: "With Britain’s referendum on the EU due to be held by the end of 2017, there is a strong chance that this could be held next year. Referendums are unpredictable - see Scotland’s of 2014 - and we are likely to see at least some market volatility. So although UK equities could do well, it could be a bumpier journey. Overall, however, I see the index remaining relatively stable, finishing within 6,100-6,500.”
• The best and worst performing FTSE 100 shares in 2015
• Debt-free dividend shares – and those under threat
Are UK shares cheap or expensive?
One way to work out whether shares are expensive or cheap is to look at the price-to-earnings (p/e) ratio of a stock market.
This measure, which compares each company’s share price to its earnings, then takes the average for the whole market.
At this stage last year, the FTSE 100 had a p/e ratio of 15.2, slightly above its long-term average of 14.7. Now, even with price falls this year, it is currently trading on a p/e ratio of 16.9 times, indicating that the market is expensive in historical terms.
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