As investor’s I think we’re at a curious juncture. The hard, quantitative bit of our brains tell us to be fearful. Valuations are looking stretched. But the emotional side of our brains soothes us, suggesting that the backwards-looking numbers don’t tell us the real truth about the more optimistic global story. As a result, many investors are left in limbo – neither confident enough to fully commit to deploying extra cash into risky stuff nor fearful enough to sell out existing profitable trades. Crucially I think we are possibly now at a place where traditional metrics don’t really give us many clues. Yes, the CAPE measure of long-term valuations is high, but maybe its useless as a short-term indicator? Yes, investors may be ploughing more money into bond funds, but again, maybe this doesn’t tell us much except that they need an income and are unwilling to massively scale down their fixed income exposure. I would suggest that we are now firmly into an emotional space where behaviour based processes are at work, overruling some traditional risk measures. But then again, maybe I’m also being a tad unfair to the optimists. They can point to hard numbers which show that earnings growth is strong and the global economy seems to be in fine shape. In sum, it’s not all just about emotions.

In amongst this noise, ordinary investor’s need to find some usable signal about what to do next. The task is complicated for British investors by the slightly contrarian state of our own economy.  Although we’re not doing as badly as many Remainers thought, we aren’t quite running forward at the same clip as our European peers. The political instability has slowed us down noticeably, although I think the short-term effect is still fairly subdued. This caution shouldn’t make us myopic and think that the rest of the world is angst-ridden. It isn’t.

So, my only observation is to say how I’m positioned. Currently, I am close to running 100% fully invested but with an increasing focus on special situations where I think the wider market has got pricing wrong. My own core view is that 2018 will, probably, be a decent year with lots of ups and downs – but overall a good one for equities. As long as the central bank’s don’t surprise us with their interest rate increases, I think that bonds will continue to be a fairly dismal place to deploy cash. I don’t expect a bonds rout but equally, I don’t expect much good to happen to most bond investments except for that steady pickup of low yield.

Back with equities, my guess is that Asia is probably the most interesting place at be at the moment although Europe has some bright spots not least smaller caps and consumer stocks. In sector terms, I’m cautiously optimistic about energy stocks – not because I expect oil prices to stay very high but because I don’t expect oil prices to fall by very much. As for tech stocks, I slightly counter-intuitively think that they might have much further to go – as with everyone else I think that many obvious stocks are insanely priced but I also think that we’re only midway through a big tech disruption cycle which has got further to run.

Overall if I had to make a wild guess I’d say that the FTSE 100 might brush close to 8000 but with a more likely destination around 7800 while the S&P 500 might top 3000 before pulling back to around 2900..

On a very different theme, one place you clearly wouldn’t want to be in the moment is Catco ordinary shares. As readers of this blog will know I’ve been closely tracking these for a while. I thought I was being a little pessimistic when I suggested that the markets had underestimated the likely losses from various natural catastrophes. A few weeks back I hazarded a guess that the NAV and the share price might settle closer to 100 cents. How wrong I was. In fact, the share price is now back at 80 cents with no sign of any life. Hurricane Harvey proved to be just the start of a string of terrible events which has culminated in the fires in California. Losses have snowballed and now the shares trade well below NAV. Without wanting to sound like a broken record player, I’m not surprised although even I hadn’t expected this quantum of loss. Bizarrely I find myself slightly more interested now that the share price has crashed. I’ve already invested in the new issuance of Catco C shares, which should hopefully benefit from a pick up in reinsurance rates. But  I can’t help but wonder whether the market might have slightly overreacted with the main ordinary shares.

Sticking with the theme of ‘difficult’ funds, I also note that after a brief spike of (possibly misplaced) optimism, Empiric’s shares are back close to 86p a share.  My gut reaction is that this erosion isn’t quite enough to push the student accommodation specialist into the contrarian box. I’d be looking to see the shares rebase around 80p a share before I’d think about tiptoeing into the stock. Presumably, one more bit of bad news might be enough to push the shares drastically down.