Surveys of investor sentiment are fairly predictable.
Those asked what they expect for future returns nearly always project what's happened before, or at least what they perceive has happened before.
So ask a group of individual investors by how much the FTSE 100 will rise next year and the most common answer will be between 5pc and 7pc. Their sub-conscious tells them the stock market roughly delivers that sort of return over the long-term (it's actually been far lower over the past 15 years) and so it's the best guess to offer for the future.
This seems sensible. In fact, the professionals seem to adopt the same approach. Each Christmas for the last 15 years, I receive a flood of emails from financial professionals and pundits forecasting the following year's fortunes of the FTSE 100. Again, a rise of around 6pc is most common.
The same applies to predicting which regions or countries might deliver the best returns in the near future.
A poll publised this week by Interactive Investor, a specialist website, supports this.
Of the 11,000 that took part, 36pc said the UK would offer the biggest profit in 2016, while 21pc picked the US and 20pc went for Europe.
With the aid of printed money and other stimulus measures, these markets have all done fairly well in recent years, even if 2015 wasn't great.
"The commodity-heavy FTSE 100 index may have underperformed but smaller companies, which have far higher exposure to the British economy, actually did well throughout the year," said Rebecca O’Keeffe, head of investment at Interactive Investor.
The FTSE All-Share index fell by 2pc but it is 12pc higher than three years ago and has nearly doubled since the low seven years ago, equating to annual growth in excess of 10pc. And that's before considering the contribution of dividend income.
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Japan was also a favourite. Again, its stock market has been pumped up by the activities of its central bank.
The confidence in the UK is also probably to do with "home bias". We naturally lean towards the British stock market because it's easier to keep an eye on developments.
What has surprised me, however, is how confidence in emerging markets has been wiped out. The fear is that rising rates in the US, and a global rise in borrowing costs, will further undermine weaker economies. But rates are very unlikely to raise quickly.
As Telegraph Money has noted several times in recent months, stock markets like Brazil's now rank among the cheapest in the world despite many of the ingredients for growth - particularly its emerging middle class - now being in place.
The road to wealth has many potholes - there may be better opportunities times to buy. Today, investors are nervous. Wait until they despair and look for bargains.
I hold the Invesco Perpetual Latin American fund and the cheap DB X-Tracker Latin America index tracker. I may invest more and seek out a new opportunity in Asia, but only once despair truely sets in.
• Mapped: the world's cheapest stock markets to buy for 2016
| Country |
Proportion who believe it will offer the highest return |
|---|---|
| UK |
35.8% |
| US |
20.6% |
| Europe |
19.7% |
| Japan |
12.2% |
| China |
4% |
| Other Asia |
3.6% |
| Other developing |
2.8% |
| Latin America |
1.3% |
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