Oil prices staying low through 2015 is a major view, which affects many of the other expectations in this Perspective. Probably the biggest one is the boost to growth in the US and elsewhere, and the changing mix of winners and losers at home and around the world.

US Politics—A Wild Card that Increases Volatility and Uncertainty in the Markets

This may seem like a strange topic for an expectation. However, early signs from what will be a changing Congressional makeup at the beginning of the year, is not encouraging. If debt ceilings and budgets become hostage to an agenda around the Affordable Care Act, immigration, education, tax reform and oil, it will add significantly to volatility in the markets and consumer and business confidence. A tail risk.

Cyber Attacks—They Continue. An Investment Opportunity, But Added Geopolitical Risk.

On the back of the Sony episode there is another major cyber attack, which substantially increases investment in IT security. Those companies involved in cyber security become their own market bubble. Many more companies than we could imagine brand an element of what they are doing as being related to cyber security. The threat is real. Some of the claims are not. In addition, cyber warfare takes on major geopolitical characteristics adding to the complexities in relationships among major and some minor players.

Consumption—Changing Eating Habits Affect Stock Prices

Here’s something else one can blame on Obama—Michelle, not the President: On the margin the American diet begins to change as regular supermarkets expand into the Whole Foods milieu and the cost spread between healthy food and drinks vs the opposite is reduced. The standard fast food and soft drink purveyors, while attempting to adjust to this healthier trend, suffer from changing consumer interests. This is in part fueled by greater awareness of the health hazards from obesity and unhealthy eating in general. At the same time, medical advances hold out the prospect of a longer life if one takes some responsibility in the earlier years to benefit from the changes yet to come. This expectation may be a bit more hope than analytical, but watch consumption patterns on the margin. Mine have changed.

Other Tail Risks—Need to be Considered in Portfolio Construction

Below are some lower odds expectations, but sufficient enough to require some thought about their impact on the markets and to consider some form of tail-risk protection.

1.     A Putin-led Russia maintaining and acting on an anti-west stance

2.     A terrorist attack in the west

3.     An unexpected financial accident beyond those indicated above

4.     Something unusual in the Middle East involving Israel in what would be viewed as an independent offensive action