Last week I shared a personal story with you that, frankly, I very much enjoyed writing. It is a story about two good friends and years of hard work that has resulted in something that I believe may someday win a Nobel Prize. For my friend’s sake, I sure hope so. 

This week and next we’ll look at forecasts from some of my most trusted friends and colleagues.

I believe these forces behind the fear trade will only intensify in 2018. With inflation finally showing green shoots and President Donald Trump’s $1.5 trillion tax reform law expected to increase deficit spending, this year could provide the right conditions to spur gold prices higher.

Beware the consequences of assuming that elevated CAPE ratios are here to stay, but if they are the "new normal," low future returns are likely to be the "new normal" as well.

This article talks through a selection of charts and indicators that will be key to watch to understand the risk and opportunity set for globally focused active asset allocators in 2018. The charts cover inflation, monetary policy, bond yields, gold, emerging markets, high yield credit, global equities, and China.

John Hathaway, manager of the Tocqueville Gold Fund (TGLDX) writes in his Q4 investor letter that “cryptocurrencies attempt to mimic one of the key attributes of gold: a liquid real asset with no counterparty risk. We view cryptocurrencies as contributors, and possibly as accelerants, to the long-term undermining of all paper currencies. We see them as allies of gold and threats to fiat currency, not as an existential threat to the metal, as they have been so frequently portrayed.”

Over the past year, global equity markets have made strong advances, fueled by continued, broad-based economic growth, and in spite of a somewhat unsettling geopolitical backdrop. Over the last 12 months the U.S. economy has continued to grow at a steady rate of almost 2.5% on an annualized basis, as measured by GDP.

Emerging-market bonds delivered strong returns last year, and we think the sector has more potential. In 2018, though, investors will have to exercise caution.

In addition to popping champagne corks and black-eyed peas (at least in the South) on New Year’s Day, year-end brings something else for economists and portfolio managers: annual forecasts. People want to know what the coming year will bring. I would like to know, too. But since I’m on the other side of your monitor, I must give you my own forecast. Caveat emptor applies.

As we head into the New Year, I want to share with you the five most popular Frank Talk posts of 2017. One common theme you’ll see in these posts is they all center on the topic of gold. Although we specialize in educating investors about gold and managing gold funds, it’s worth noting that our gold posts garnered more interest than our bitcoin and blockchain posts in this year of cryptocurrency craze.

Tax reform is currently underway in Congress and could have important implications for the tax-exempt municipal market. As we wait for a final agreement between the House and Senate versions — which could come as soon as today or tomorrow — we can make some observations about how tax reform is likely to impact the US municipal bond market, based on the details reported to date.

Much as I want to know the future, I’ve long since recognized the dangers of our addiction to predictions, which are usually heralded by so-called market gurus. I’ll give you seven surefire ways to spot those purveyors of bad advice, but first let’s look at a far more useful set of forecasts.

As markets shift away from the recovery era of monetary accommodation amid synchronized global growth, some investors may be wondering where potential opportunities can be found. We present a summary outlook for the year ahead - why US interest rates look poised to keep heading higher, why global equities may have more room to run and why investors may need to be more selective in the fixed income space.

With the year quickly coming to a close, it might be time to start thinking about rebalancing the gold holdings in your portfolio. That includes bullion, jewelry, gold stocks and well-managed gold funds—all of which I recommend giving a collective 10 percent weighting. Because it’s been such a strong year for stocks—they’ve advanced more than 20 percent as of today—it’s likely that most investors will need to add to their gold exposure to meet that 10 percent weighting as we head into 2018.

As 2018 approaches, investors may want to take some time to reexamine their high-income strategies. We’ve got some advice: Be selective. Be diversified. And, perhaps most importantly, be patient.

Efforts to overhaul the US tax code have been a long time in coming (more than three decades), but this year it finally came to fruition. Congressional approval of sweeping tax reform will impact individuals, businesses—and the entire economy. Ed Perks, chief investment officer, Franklin Templeton Multi-Asset Solutions, offers his perspective of the likely economic and market implications.

Despite the near-boundless markets of 2017, there are four key drivers likely to power the year ahead. The Fed, tax reform, geopolitics and a return to volatility – and opportunity – are in line to support our cautious optimism, says Mona Mahajan, US investment strategist at Allianz Global Investors.

We believe the US economy’s current combination of moderately strong growth and low inflation is likely to see a further slow-but-steady tightening of monetary policy, following the confirmation by the US Federal Reserve (Fed) at its December meeting of a widely expected interest-rate rise.

In 1981, The Leuthold Group was founded by the sagacious Steve Leuthold. It is an independent stock/economic research firm that produces disciplined, quantitative financial and contrarian financial research for investors. The research team is led by CIO Doug Ramsey, who is one of Wall Street’s best and brightest.

Today’s fixed income investment environment can be especially negative for bond portfolios heavily weighted with core holdings such as Treasuries, agencies, MBS, and investment-grade corporate bonds—all of which are highly sensitive to rising interest rates and changing fiscal and monetary policy.

The economic calendar is loaded, especially with reports on housing. Despite this, the calendar and recent events will stimulate pundits to get out their crystal balls. I expect many to be asking: Can the rally in stocks find fresh legs in 2018?

Perhaps it’s premature (or even a jinx) to mention that if the S&P 500 ends December in the green, it will be the first time in history that U.S. stocks—as measured by that index—were up during every one of the 12 months.

US stocks will likely rise in 2018. By how much is anybody's guess: the standard deviation of annual returns is too wide to get even close to a correct estimate on a consistent basis. Earnings growth implies 6% price appreciation, but tax cuts could boost that to 13%.

Below are five questions to help guide your thinking when making investment decisions in the new year.

We expect the global expansion to continue in 2018. Yet investors should prepare for both the consequences of policy shifts and the opportunities presented in more difficult market conditions.

In one of our meetings, Justin asked a question of me. He said, “Why is it that the only investment managers telling people to be careful are old timers like you? Jeremy Grantham of GMO, whose seven year forecast is negative in all asset classes other than emerging markets. Howard Marks, whose most recent memo “There They Go Again…Again” strongly suggests people be cautious in their investing today.

In a new quarterly letter to GMO's institutional clients, head of asset allocation Ben Inker discusses why investors should be thinking about the risks of surging inflation, even if such a surge may not be inevitable or even probable. Chief investment strategist Jeremy Grantham considers the current market environment and how to most rationally take risk with the ultimate stakes on the line.

We prefer to take economic risk in equities over credit given tight spreads, low yields and a maturing cycle. We expect increasing profitability to power equity returns, especially in Japan and emerging markets (EM).

Long-term interest rates remain stuck in a range that has defined the last six years. Russ discusses why 2018 may see more of the same.

The US Federal Reserve delivered another interest-rate hike at its December monetary policy meeting, marking the fifth such move in its tightening series starting in December 2015.

Yesterday’s news that the Democrats won the Alabama special Senate election, for the first time in 25 years, rattled U.S. politics. By taking the Republican majority in the Senate from 52 to 51, it reduces an already tight margin for difficult votes.

A review of last month’s market-moving events across countries and asset classes.

The volatility bond investors expected when 2017 began never showed up. We suspect it will come out of hiding in 2018. With valuations stretched and monetary policy turning, investors will want to think carefully about which risks they take.

Even as the Fed is expected to hike rates in December as part of its policy normalization, a majority of ECB governing members continue supporting the bank’s asset-purchase programme. Shifting central bank dynamics will make the landscape increasingly difficult for investors to navigate says Franck Dixmier, Global Head of Fixed Income for Allianz Global Investors.

With the stock market and Bitcoin reaching all-time highs, what can possibly go wrong? In offering my thoughts on 2018, I see my role in reminding investors to stress test their portfolios. Is your portfolio built of straw, sticks or brick?

We have used the aforementioned quip from our departed friend Jerry Goodman (aka Adam Smith) a number of times over the past 47 years because of the wisdom it imparts. We dredged it up this morning after reading an article in Barron’s over the weekend titled, “Man and Machine,” which was an interview with Omar Selim, the CEO of Arabesque Asset Management, a quantitative and sustainable investment management firm.

The following are some commonly asked questions and concerns I’ve heard from advisors about 401Ks, target-date funds and retirement.

I met Philippa Dunne, co-editor of The Liscio Report, at the Camp Kotok fishing trip last August. She dials into state tax receipts and has many deep contacts. What I like is how she tracks the data on the lookout for recession risks. I found the most recent report excellent.

Writing about blockchain and bitcoin right now is a little like buying a new computer in the 1990s. The tech was advancing so fast in those days that as soon as you brought the thing home, it was sorely outdated. Similarly, the cryptocurrency world is changing so rapidly at the moment that even before “the ink dries” on one of my posts, some important new development has already surfaced.

After supposedly chomping on the bit for years to pass meaningful tax reform, Republicans are now set to blow an historic opportunity. Whatever version of the Bill that emerges from the House and Senate Conference Committee...

This year may be remembered for its low volatility and the strong performance of nearly all asset classes across almost all geographic markets. But 2018 may follow a different playbook.

Will the global growth momentum of 2017 carry over into next year? Is there a risk of a pullback in the short term? See what our strategists' views on global investment markets and economies are for the year ahead.

The gradual reversal of expansionary monetary policies – at differing paces globally – will require some investors to adjust their approaches. Protecting purchasing power will remain a priority as official inflation understates real-world costs.

Easy monetary policies during the post-crisis period have propelled equity prices higher and driven bond yields lower. But as central banks reverse their quantitative easing (QE) and raise rates, this “Goldilocks era” will come to an end, according to Jeffrey Gundlach.

So, we are now in the ebullient month of December and as often stated, “It is tough to put stocks away to the downside in December. It can happen, but it’s pretty rare.” In fact, there were only two years that saw negative returns for the S&P 500 (SPX/2642.22) in December.

The U.S. stock market has bucked incessant negative news and now appears to be in melt up mode; meaning discipline is more warranted than ever.

The business cycle is one of the most important drivers of investment performance. As the nearby chart shows, recessions lead to outsized moves across asset markets. It is therefore critical for investors to have a well-informed view on the business cycle so portfolio allocations can be adjusted accordingly.

The U.S. economic expansion is now the third-longest on record. Does this mean a recession is looming? Senior Investment Strategist Paul Eitelman digs into the data and assesses the risks.