Anybody wanting a clue to where share prices are going this year will get one next Thursday – and it might not be pretty.
The US Treasury will then release its latest data on capital flows. What matters for investors in these is the net foreign buying of US equities, because this has for years predicted annual changes in the All-Share index, and indeed changes in global share prices generally. Big buying in 1999-2000 and in 2007 led to prices falling in the following 12 months, while light buying or net selling in the early 2000s, 2008 and 2012 led to rising prices.
In saying this, I’m not speaking only with the wisdom of hindsight. Back in 2007 I wrote that record foreign buying of US equities pointed to the market falling sharply. That was not wrong.