ough the year's end brings with it more optimism in the markets and the broader economy than this time 12 months ago, there is still a strong belief that there are some aftershocks to come in the wake of the global financial crisis (GFC).
That is a strong conclusion that can be drawn from the Centre for Investment Education's (CIE) latest poll asking respondents how they expected global investment markets to behave in 2010. While the largest percentage, at 39 per cent, said they expected markets to improve, the combined weight of the other three responses (61 per cent) indicates just how wary market players are on the cusp of the new year.
A sizeable proportion, 22 per cent, believes the markets will fall next year, another 24 per cent think they will trend sideways, while 15 per cent think they will fluctuate wildly. There's no uniformity of opinion in those responses to give any trustee comfort they have got their investment strategy right as they enter 2010.
That said, there is far more optimism compared with a year ago.
That 2008 will prove to be seminal, entering the history books like 1890 and 1929, is hardly surprising. In the space of less than six months we saw the world's financial system temporarily frozen in the wake of takeovers (Merrill Lynch and Bear Stearns), government bailouts (American International Group, the car industry), bankruptcies, bank failures, massive write downs and losses by financial institutions.
But as the poll indicates, there are still worrying signs - although the fact 63 per cent of respondents think the markets will either improve or tread water should provide some cold comfort.
Those signs are not hard to find. Locally, higher interest rates seem inevitable as the Reserve Bank of Australia (RBA) takes a hard line on any possibility that inflation will gather a head of steam. The fact that most sectors of the housing market are enjoying a post-GFC renaissance will only stiffen the bank's resolve.
And higher interest rates will mean a stronger dollar and less competitive export industries.
But the big economic questions still focus on the US. This recession has been the longest and worst since the 1930s; unemployment still sits above 10 per cent. Government debt, at more than $13 or about 83 per cent of GDP and rising is unsustainable in the long term.
But there are some glimmerings of hope in the world's largest economy.
Although unemployment might keep rising, temporary hiring is rising - typically a sign that unemployment has peaked. In the second half of 2009, consumer confidence began to show signs of life; in November, it was 49.5 (measured against an index of 100), a significant improvement on February when it stood at a lowly 25.3.
Other positives include the strong growth in sales of corporate debt in 2009 ($1 trillion in 2009, compared with $955 billion in 2008) and the remaining spending in the first half of 2010 from the Obama administration's $860 billion fiscal stimulus package.
As we reflect on the end of a year that will go down in history as one where public debt around the world hit new record highs, let's hope that the 39 per cent of the respondents in the CIE poll get it right.
Frank Gullone Centre for Investment Education is managing director