Those who have diligently studied past trends and then predicted the way specific businesses will develop have been able to claim great success in their investment portfolios. One such guru is Warren Buffett, a man who many look up to and respect. Sometimes accurate forecasts result in great market movements.

Yet there are no foolproof market predictors; there is nothing certain about the way equity markets move. It's OK to dust off the crystal ball, but no one can predict with any degree of accuracy what is going to happen in the future. The fact is that the markets are influenced by so many factors that it is almost impossible to put them all together into a generalized trend.
The emerging markets of Brazil, Russia, India and China (BRIC) have enjoyed exceptional bull runs both individually and collectively for most of the past two years. However, over the past two months they have fallen sharply. These falls weren't predicted with any authority.
If we study year-end market movements in recent history, the period from Dec 26 to Jan 15 often shows unpredictable results. There are often downward trends that commonly reverse just as rapidly as they develop. However, we have seen a sustained decline since January in the BRIC markets. There is no specific cause to point to, but there are clearly some factors that have influenced the trend.
China's inflation rate has been a concern and many feel it will cause labour costs to soar. The base bank rate in China increased eight times in the past year, which shows that there is some serious work to do on inflation.
However, the Chinese government has announced that it is determined to control inflation in its next term. The growth forecast has been reduced, and this is clearly preferable to price rises leading to uncompetitive exports.
The global commodity bull run has sent the cost of raw materials higher and is also pushing up the cost of living for consumers in emerging market countries. This has manifested in big increases in food costs. These factors could have a significant influence on the price of finished goods produced by BRIC countries and make them less viable in world markets.
The Middle East crisis has pushed up the price of oil, and this affects the economics of just about everything. With the sustainability of oil supplies in question, some fear that oil prices will increase further and add to the inflationary fires in the BRIC economies and globally.
India had one of the worst short-term declines in history in January and February, leading many to wonder whether its emerging market story is changing. The future of the BRIC markets seems inextricably linked to whether these countries can get a grip on inflation.
Another point to consider is that flights of investment funds have landed back in developed markets in the West, which might be perceived as safe havens.
Will this trend reverse once Middle East problems are resolved? Meanwhile, the bull runs in the West have been enhanced over the past month by this shift in investment, with the Dow Jones, FTSE and S&P500 surging ahead.
However, some of the problems that emerged in the West during the financial crisis have not been resolved to the point where it can be said these economies have truly recovered.
The housing situation in the US is an example. Property prices have still not recovered and many feel that property is a very good buy. Warren Buffett predicted recently that US property prices would bounce back. ""Money will always flow toward opportunity, and there is still an abundance of that in America,"" said Mr Buffet in a letter to shareholders.
The way in which the recovery has taken place in Western economies has been interesting. There has been some sector-changing in investment trends, which has not had any noticeable effect on the overall recovery. However, as the accompanying table comparing the performance of various sectors over the last two years shows, some of these changes have been quite significant.
Despite the heavy changes within sectors, overall performance on the FTSE 100 has been very good, although we are still not back to pre-crisis levels.
Some of the changes are due to specific events, such as the Gulf of Mexico oil leak, which pulled the oil and gas sector down in the last year. With a very high recovery in the first year, financials were disappointing in the second. However, look at the record profits made by Standard Chartered Bank over the entire period.
Analysts are now trying to predict future trends based on such statistics, but as mentioned, when you look at the complexity of the global factors affecting performance these days, that is difficult. Of course, individual national economies have a major influence on how markets respond. Few could have predicted the crisis in the Middle East. Another current and unprecedented phenomenon is the US Treasury's monetary easing policy to inject newly created money into the US economy. This has also introduced new factors into the global markets.
Some predict a double-dip recession, particularly in Europe, because these nations have generally adopted a policy of austerity, as opposed to the US monetary easing route.
With the euro in crisis as a result of the debt problems in Greece, Ireland and possibly other countries, a different approach has been taken. While European nations share a common currency, the situation is different than in the US because there is no central government to impose a uniform monetary policy.
(Source: Bangkok Post)