Why caution is key in 2013

James Sullivan, co-manager of the Miton Special Situations and Strategic portfolios, warns investors not to get too carried away by the New Year optimism.

As we welcome in the New Year there is a sense of optimism about what lies ahead. Sadly, the global recovery is likely to remain subdued for the foreseeable future with modest and fragile growth. In the eurozone, the worst of the crisis is probably yet to come as the authorities appear resolute in their determination to muddle through. The ECB’s announcement of Outright Monetary Transactions may help manage the burden of high borrowing costs, but it has not solved the underlying problems of peripheral countries. With politicians seemingly unable to accelerate progress towards fiscal u...