Brace for a volatile ride ahead

THERE'S an old saying for markets that as goes January, so goes the year. We don't know whether prices will be higher or lower at the end of the month but so far, if the saying proves accurate for 2015, then investors are in for a hugely volatile 111/2 months ahead since the world's major indices have gyrated wildly in the first six trading days of the year.

This is arguably to be expected as markets wean themselves off the free money that was handed out by the US Federal Reserve for about six years since the Lehman Brothers collapse in 2008 - handouts that took risk off the table as assets were allocated according to liquidity flows and whether the handouts would continue, rather than fundamentals.

For some, heightened volatility and resources being channelled to their best economic uses would be a welcome change from the bland low-volatility 12 months that marked 2014. After all, with volatility come opportunities to make money and for most of last year, if you were not invested in the banks (and a handful of others) you would probably have struggled to stay in the black.