Happy New Year

How did you do this year? Was it Germany, up 22%, or Italy, down 7% ?

The past year turned out to be a game of two halves and the footballing metaphor has become the favorite shorthand among the strategists for 2008. That almost certainly means it won't be, but let's run with the metaphor for a little while longer.

The biggest decision in 2008 for many investors will be in deciding when the banking crisis is over. At what point do the risks of further writedowns become diminished by the compelling value opportunity? Apparently many of the sovereign wealth funds have already made up their minds. Warren Buffett has already been making sizeable investments, and while he claims to be no market timer, no one would dare fault his ability to pick a value trade.

The strategists argue that decision will determine equity market fortunes, with the second half of 2008 seen as being the better half. Well, not too many market professionals were able to predict the credit crisis or the subsequent period of banking confessionals, so take all crystal-ball gazing with a healthy measure of skepticism.

The rise in volatility has tested the market ability of the asset-management industry and found many segments wanting. It has been an ugly end of year for the long only industry. Many hedge fund managers will be wondering whether they will still be managing enough money in 2008 to stay in business.

Today’s Guest Host – Peter Lenardos reminded us of the risks:

- Oil prices

- Geopolitical situation

- Credit markets

- Elections – US, Spain, Pakistan and possibly UK

- Housing prices – recovery, stabilize or decline?

- Investment bank writeoffs, more to come?

- Further scrutiny of private equity firms and hedge funds

- Currency fluctuations

- China – front and centre (Beijing 2008 Olympics)

But, hey! It's New Year's Eve. Take at least a day to put the market worries aside and celebrate being involved in the game.

Good luck to you all.