Reasons to be cheerful?

2014 will not go down as an epic year for investors. Certainly there were pockets of strength – for example, gilts, China and the US – but the majority of equity markets were flat or negative over the year.

Investors had to content themselves with grinding out a few percentage points from an income yield and being glad they did not own Russia (or not).

To be fair, few expected much better. A benign economic environment aside, asset prices had looked almost universally expensive this time last year. It is difficult to make a more promising case for 2015.

In many instances, asset prices still look expensive, particularly in those countries, such as the US, where recovery would seem assured. Meanwhile those markets offering apparent value look particularly toxic – Russia, anyone?

The fixed income markets, again, look extremely expensive on almost all measures. So far, so bad – so are there any reasons to be cheerful?

A number of commentators have suggested the oil price may deliver more positive economic data than the gloomy consensus currently believes. Certainly it would be rare in history if a low oil price did not deliver some kind of kick-start to the global economy. This may finally deliver the much-anticipated but conspicuously absent recovery in eurozone growth.

There is also the chance – increasingly hinted at by ECB president Mario Draghi – that quantitative easing (QE) may finally materialise. Given the biggest obstacle to eurozone QE has been Germany, which is now feeling considerable economic pain from the combined weakness of Russia and China, this looks a greater possibility. But Russia continues to weigh on sentiment more widely. The potential for severe geopolitical unrest as the country finds itself increasingly marginalised and economically destitute is not to be underestimated.

Commentators such as Newton’s Jason Pidcock have suggested Russia is on the brink of social and economic disaster. However, there is an alternative outcome – Vladimir Putin may decide he cannot weather an economic storm and capitulate. The problem could end as swiftly as it has begun. Investors must weigh whether any of these positive outcomes appear possible – or probable.

If so, it may be another boring year, in which already expensive assets deliver lacklustre growth. Perhaps the best investors can hope for – counterintuitively – is volatility. This could deliver idiosyncratic opportunities of which they can take advantage. Either way, they will need to be nimble and well-diversified.