Traditionally, these annual forecasts aim to predict near certainties that readers of mainstream investment commentary could be forgiven for thinking are long shots.

This year, the outlook seems a little clearer than it seemed in December 2002 – but not much. The key ideas underlying these forecasts are: central banks are likely to continue to keep near rates at current levels until they believe that inflation has been defeated but that cash rates probably won’t go much higher; returns from equities will be prone to more downward movements than usual; bonds and corporate debt will produce...