THE QUESTION that investors really need to ask themselves ahead of 2018 is whether the last 12 months have been as good as it gets?

A potent cocktail of rabid central bank buying of assets, an abundance of cheap money, improving investor confidence, a synchronised global economic expansion and almost unfathomably low levels of volatility have lured investors into riskier and riskier investments and sent the price of everything from financial assets to decidedly average football players substantially higher.

While many of the football players have been sold at ludicrous valuations, it is easier to justify the moves that we have seen across global asset markets.

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While we are undoubtedly concerned about the valuations of many assets and the life of contrarian investors has rarely been less fulfilling, the inescapable facts are that the world has been better in 2017 than many suggested and the investment environment has merited positive price performance.

But what next? Here is where things, as always, get more challenging. Predicting the future is much harder than assessing the past and I have to confess to currently having a confused and cloudy crystal ball.

It is fair to say that making predictions about the global economy is currently less challenging than making forecasts for asset market returns next year. Indeed, we continue to believe that the near future will look like the recent past and the trend of solid, but unspectacular growth, which the global economy has enjoyed - or endured - over the last eight years, will persist through next year.

The current above trend growth rate that is being enjoyed in the US, China and Europe is unlikely to persist through the whole of next year and we would expect a moderation of global economic growth back down towards three per cent.

While this rate of growth is perfectly respectable, it may not be sufficiently powerful to justify a further strong rise in global asset markets next year. Indeed, our current view is that equity markets will struggle to make much headway next year at an index level.

As yet, we do not see the conditions required to bring about the onset of a new bear market, but nor do we believe that valuations of most company shares are at such cheap levels that gains will be easy to achieve. Indeed, our view from the start of 2017 that there will be a great divergence in the fortunes of various different sectors and companies persists and this should ensure a fruitful environment for active managers after a renaissance in their fortunes this year.

Sadly, many of the opportunities that we identified as likely outperformers at the start of 2017 have fulfilled much of their promise.

Our positive view on the Far East has proved correct, with Chinese and Japanese investments performing wonderfully this year, but this means that at least some of their future potential has now been realised. However, we still expect these parts of the world markets to do relatively well next year.

We have similar views over the specific credit opportunities we have long admired in Europe, which have made outsized gains over the last few years, but this positive performance has now reduced the returns we now expect in the future.

To be clear, the opportunity to find investments to make us salivate, as we could in 2009, 2011 and 2016, has now mostly passed. Investors must recognise that returns in the future are unlikely to match either those healthy gains of the last few years or long run history, despite the fact that the global economy appears to be currently enjoying a moment in the sun.

If we see further gains from today’s lofty levels, we might have to assume that asset markets might well be doing their own impression of Icarus.

Tim Wishart is senior investment director at Psigma Investment Management.