January is the month when most traders start off with a blank space in the P&L account. The previous year is history, the bonus (hopefully) has been paid out and now you have to do it all over again in the next 12 months.
Each January, you think that the coming year has the potential to be the best ever: you vow to take full advantage of every trading opportunity, promising yourself that this year you will definitely cut your losses and run with your profits and that you'll avoid all of the stupid mistakes you made the year before.
Trading, like marriage, is the ultimate triumph of hope over experience.
Actually, experience is both an advantage and disadvantage when it comes to making money in the markets. You're less likely to be taken in by the gloss that analysts put on their preferred area of the market but you're equally likely to be far too cynical for your own good, which means that sometimes you pass up perfectly good trades because you don't trust the hype. (Often you're right not to trust the hype and the perfectly good trade can unravel six months down the road - but there's always one that gets away.)
There's the temptation, too, to look for the next big thing. Last year it was China, whose meteoric economic rise has propelled it to world-player status in the global marketplace - although not without the necessary accompanying corporate scandals.
The problem for outside investors is that there continues to be a lack of transparency with regard to corporate regulation and governance in China, with a particular problem in the area of "related party transactions" where the relationship between subsidiary companies is often complex and difficult to understand.
The Chinese seem ambivalent about corporate governance and investors are possibly less protected there than almost anywhere else in the world. Although, of course, having complex regulations on corporate governance doesn't necessarily mean that investors are any better off if those regulations aren't enforced.
The actions of China Aviation Oil (CAO) traders weren't as catastrophic as those of Enron's. And the CAO chief executive was arrested a lot more quickly.
Although China will definitely continue to influence Western economic thinking, attention has already switched to India as the new kid on the block. We are already used to the notion of India as the call centre capital of the world but the country has moved on to payroll and transaction processing and is now looking towards engineering design, technical services and investment management.
The business processing outsourcing industry is worth over $3.6 billion (€2.7 billion) to India and is continuing to grow. According to some analysts, more than 80 per cent of the US Fortune 500 companies are now looking at executing non-strategic work offshore.
In the UK, the trade union Amicus has voiced concerns that over 12,000 jobs will be outsourced in the next year, in addition to the 18,000 that have gone since October 2003. In the US, people talk about being "Bangalored" which means that they've lost their jobs because the work has been outsourced to India.
US giant General Electric recently sold 60 per cent of its outsourcing firm to a couple of US private equity firms.
The outsourcing company was set up near New Delhi in 1997 and has increased revenues to a projected $420 million last year, from $26 million in 1999.
Last year, Chinese horoscopes were all the rage for predicting both your personal life and your investment portfolio. Now people are looking at Indian horoscopes and Vedic astrology to answer questions about the year ahead.
The astrology site www.indastro.com allows you to order your investment portfolio astrology report for a mere $20. This report will tell you, apparently, what kind of investments suit you and which industries you should be looking at and, in fact, whether the stock market is right for you at all.
However, back in the Western world, the old story of stock markets doing well in years which end in a five is doing the rounds. There does seem to be anecdotal evidence to support this theory - in 1995, the S&P was up 34.1 per cent. In 1985, growth was 26.3 per cent. And in 1975, it was up 31.5 per cent.
Of course, as all investment managers will tell you, past performance isn't always a good indicator of future growth and so 2005 could be the one year which disappoints. However, people want to hold out hope that the lift seen by most equity markets towards the end of 2004 will continue into 2005 and make that prediction come true.
Most of the good news came in the technology sector which may have finally shaken off its image as the black hole of investors' dreams. My favourite tech stock, Apple, managed to triple over the year thanks to the massive sales of the must-have iPod. I'm hoping that Steve Jobs has been looking into his crystal ball for the year ahead and thinking a little bit outside the slimline box for ways to keep the company at the forefront of cutting edge technology.
My feeling is that Apple Computer may need to look at another product - I'm longing for the Apple mobile phone - given that camera phones are now replacing digital cameras with the quality of their pictures, it surely can't be long before the provision of downloadable music directly to the phone replaces even the most stylish of portable digital music players.
The iPod has become so ubiquitous now that a consumer backlash is almost inevitable as people ask for even more features and exciting designs.
The trick for everyone, traders and investors alike, is to try to stay ahead of the curve. But in an era of instant communication and fickle consumerism, it becomes harder and harder.
