Anyone trying to figure out where the markets are heading in the coming months is bound to find the road map hard to interpret, with few clear signposts and plenty of dangerous curves and rock falls still unmarked.
Will the fragile global recovery take hold or come unglued, as Chinese demand for raw materials inevitably slows and governments stop resembling crazed gamblers on a Las Vegas spree?
Can equities resume the upward trajectory that made 2009 so much more pleasant than the permabears expected? Or is this the start of the next steep leg down that those same prognosticating pessimists keep flogging?
Then we have the ever-confounding commodities story. Last week, a breathless report out of London warned that rock-bottom interest rates were drawing boatloads of hot money into oil, gold, copper and the exchange-traded funds tied to their price moves.
Cat:e528746c-3414-401a-b14b-50247e3bdf01Forum:d0fa4e14-88d2-41f9-8a19-896bdff9544b
The result: another dangerous asset bubble in the making, one sure to burst with stunning impact the moment central banks start jacking up the cost of money again.
So what happens? Well, the market gets whacked by fears of a full-blown debt crisis stemming from the deepening woes of deficit-ridden Greece, Spain and Portugal. There's even talk of a possible bond default by Athens.
Its euro partners could not afford to let such a Greek tragedy unfold. But whenever risk levels rise, the safety-first crowd heads straight to the U.S. dollar. And that spells trouble for commodities.
Crude oil futures briefly fell below $70 (U.S.) Friday, hitting a seven-week low. Copper plunged more than 6 per cent. And gold suffered its steepest drop in months.
Even the most ardent of gold bugs knows a rising greenback is bad news. And it's probably time for them to look elsewhere for fun and profit.
That's the opinion of George Klar, an investment veteran who is no gold fancier but acknowledges it has its time and place. This just doesn't happen to be one of them. "Can gold morph into fool's gold?" Mr. Klar asks. The answer is yes.
As an investor with a long time horizon, he sticks with good-quality stocks and doesn't even try to figure out what the market might be up to in the here and now.
"Over the next month or two, anything goes. You will have an amplified reaction to news. And we are seeing that more and more," says Mr. Klar, who teaches finance at York University.
As he is neither a day-trader nor a momentum player, he can afford to take the long view. And although he is in his early 50s, his version of a long investing horizon is 30 years.
"Anyone looking at the last 10 years in the market would have to conclude that investing in stocks is a terrible idea. You can't look at equities from that short-term perspective," argues Mr. Klar, who also runs Alternativ Solution Inc., which advises institutional clients on investing and risk-management issues. (The misspelling of both the firm's name and his blog, alternativchronicle.com, is deliberate, to set it apart from other "alternative" investing websites.)
People place too much emphasis on recent events, says the long-time student of investor behaviour. "The tendency is to overweight the recent past and underweight the long-term trends."
What makes him impervious to the current turbulence and the bleak future landscape sketched by some seers?
"I'm not a macroeconomic kind of person in the first place," he says cheerfully. And although some of his best friends are economists, "as much as I love their company, I don't really see the link between macroeconomics and forecasting rates of return."
The key to market success, he insists, hasn't changed. It depends on investors' skill at assessing a company's proper valuation and how much they pay to get it.
Mr. Klar seeks out only what he views as companies with consistent track records and sound business strategies. Most of his own holdings fall into the value camp, but he is not averse to growth stocks if he can gauge their potential.
But let's get back to his unusual time horizon.
The conventional wisdom is that by the time people near retirement they ought to be reducing risk exposure.
Mr. Klar says we should think of investing the way a pension fund would, as if we are never going to end up in that great bourse in the sky.
"Individuals have always had a finite [investing]time horizon. But it's getting longer and longer. The concepts underlying those investments are also stretching out, because people are looking at investing for future generations."