During the closing weeks of 2013, the main question facing stock market historians is surely whether this year will prove the best
for the US markets since 2009, or even longer. By late November, the S&P 500 index, the broad and best measure of Wall Street stocks, was up more than a quarter from its level at the end of 2012.
What history also shows - as our charts show - is that very good years for the US - such as 1995, 1997, 2003 and 2009 - are often followed, not by a hangover but by another year of positive returns, albeit less spectacular than the one before. Some other markets show similar patterns although that's not always the case. That is the big question facing investors this Christmas. They know 2013 has been a good year for shares, particularly in the US but also to a lesser degree in the UK, where the FTSE 100 index was more than 10 per cent up by late November, but does that mean they should resist the temptation to make any further investments until they see better value? Or does it mean that it there is still value in the market, even at these higher levels?
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Andrew Milligan, head of global strategy at Standard Life, an IFP corporate member, is feeling optimistic that the markets still have more to give. He said: "We are broadly positive on prospects for global equity markets on the back of a continued recovery in corporate profits. They can continue to make progress into 2015, as long as policy errors are avoided and corporate profits expand." The markets favoured most by Standard Life for 2014
include the US, UK and Japan. Mr Milligan said: "This reflects our forecasts for better corporate earnings' growth into next year."
James Humphreys, senior investment manager of private bank Duncan Lawrie, highlights Japan. He said: "It's had a fantastic year. We think the yen will continue to weaken which will support the equity market. Japan is under owned by UK investors, both institutional and individual." He also likes Europe on the grounds of value. Mr Humphreys said: "We like European equities on valuation grounds compared to the US and we like the UK too as growth is picking up." He sees less opportunity in the US. "Next year won't be as good a year as last." He plans to sit tight on emerging markets and might even take a punt on India. He added: "It might be interesting in 2014 with the election coming up."
Gavin Haynes, managing director of Whitechurch Securities, is more cautious and suggests that global markets will only continue their upward trend on the back of economic improvements and corporate profits growth taking hold in the year ahead, if this happens - but even then this could cause hiccups for investors. He added: "If the recovery gathers pace too quickly
then the concern is that economies could overheat and inflation emerge. In this scenario Central Banks will tighten monetary policies, eventually leading to interest rate increases. This could cause turbulence in investment markets in 2014."
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While everyone will naturally celebrate improving economic performance, Mr Haynes points out that this will create fresh challenges for Financial Planners and their clients when deciding how to position portfolios.
He said: "The US stockmarket has led the way in recent years, but areas such as Europe and the UK look more attractively valued. For the more adventurous investors China and selective emerging markets offer recovery potential."

Danny Cox CFP^CM, head of Financial Planning at broker Hargreaves Lansdown, is prepared for potential turbulence but reckons it may only be short-lived. He said: "It would be easy to be bearish about markets. The developed world remains deep in debt, and markets have been driven by a powerful cocktail of low interest rates and quantitative easing.
"A withdrawal of this support would undoubtedly cause short-term volatility - we saw this in May when the US Federal Reserve suggested
tapering quantitative easing, only to backtrack."
He does not believe UK interest rates will rise for some time yet, at least not until after the election in 2015.
Mr Cox said: "The Dow's record highs also suggest the market is less worried about the impact of tapering than before."
Mr Cox believes that so long as no unexpected events cause jitters, the markets should be set fair for the start of 2014. He added: "In fact, I can easily see the much talked about 'Santa rally' pushing the FTSE 100 higher by the end of the year." He believes that planners should look on the events of the past five years sparked by the banking crisis as an argument for "investing in a blend of aggressive and defensive funds."
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Bonds and gilts
Bonds - whether government backed or corporate - are popular in times of meagre bank interest rates and they have proved a refuge in the last five years of mayhem for investors wanting income. Mr Haynes fears they may have an identity crisis in 2014. He said: "The positioning of fixed interest investments is a key challenge for 2014. I expect bond markets, including gilts, to be dictated by monetary policy within the US economy and if QE is withdrawn more quickly than expected, it will be bad for bond markets."
But as more people piled into corporate bonds in the last year, their prices rose - and their yields fell. QE added to this downward pressure on yields.
Meanwhile, the bond market hasn't enjoyed all the talk about the ending of QE either and is set for further volatility, especially with signs that interest rates will eventually be on the rise again."
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Christine Johnson, manager of the Old Mutual Corporate Bond and Old Mutual Monthly Income Bond Funds, is pessimistic on government bonds, concluding we should all, "stay out of gilts next year." She said: "The outlook for gilts in 2014 is very overcast indeed – with growth picking up and employment rising the only protection from
rate rises might be a 2015 event the market will anticipate that rate rises, when they come, may need to be swifter than currently expected."
Mr Haynes confirms this as a no-go area. He said: "There is little value in holding gilts given that they offer a yield that is struggling to beat inflation."
And Ms Johnson believes the better rated corporate bonds will suffer by association. She suggested: "Moving down the credit curve to more GDP sensitive issuers will help to mitigate the downside."
Mr Cox agreed and recommended investors were choosy about which bonds they opted for.
Mr Milligan added: "The valuations of investment grade credit and government bonds have improved in the past year but we see these asset classes as slightly or noticeably expensive."
The best place for bond investors is likely to be in strategic bond funds because of the flexibility they allow fund managers to switch between bonds in response to a changing climate, selecting the ones that offer the best opportunities. Mr Haynes added: "Given the gradually improving economic outlook I would continue to favour high yield corporate bonds. But I would also hold some index-linked bonds to provide inflation protection."
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Property and commodities
Property can be an alternative to fixed interest and Mr Haynes expects most of the gains in 2014 to come from income rather than capital growth.
Mr Cox agreed but warned: "The case for commercial property is improving, however structurally open ended funds have inherent problems which can result in investors being trapped when markets turn. Timing your way in and out is virtually impossible. There is no bubble here."
Mr Humphreys added: "We'd choose Real Estate Investment Trusts rather than funds because they do development work and can get better returns."Gold appears to have had its day, with heavy falls in 2013.
Mr Haynes said: "I would not be surprised to see the gold price fall further in 2014.
A bi-product of QE has been to weaken currencies, which has been a key catalyst for holding gold over the last few years. With a slowdown of QE, this is no longer a reason to buy gold."
Whatever 2014 brings, the main certainty is there will be ups and downs. But in order to cash in, investors will be wise to be prepared. Mr Cox said: "I suggest holding some cash, in order to pounce on new opportunities as and when they arise."