Batten down the hatches for downside shocks this year

ON UK EQUITIES

January's market falls were just the warm-up act for downside shocks later this year, warns City Financial multi-manager Mark Harris.

2014 has been approached with a sense of trepidation, due to a number of drivers. By any historical standard, the magnitude and duration of the developed equity market rallies was extended. The MSCI World index had not suffered a correction of 10% or more for over 400 days, the eighth longest period on record, according to SocGen. The S&P 500 had risen without a 5% correction for the whole of 2013. It was the fifth year in a row the S&P had risen more than 5%, a feat only performed once before this century.  It is also a midterm election year, which usually heralds weak equity returns. ...