by Rob Isbitts, Sungarden Investment Research

2014 is behind us. And since we tend to not want to do things the way the Wall Street herd does, our 2015 outlook is formatted this way: we list a group of potential scenarios, and then assign our “best guess” probability that they will happen next year. This is about considering the possibilities, not making outright predictions. Big thanks to Sungarden analysts, Mark Jakupcik and our new addition Mike Ratelle.

For the statistics fans in the audience, yes we are saying that three possible things can happen here, and they are all about equally likely in 2015 (call us wimps!). Regardless of what happens, it will have a noticeable impact on the economy. And eventually, that will flow through to stock prices. And while market reactions to events like this can be violent at times (witness the near halving the in the oil price this year), the flow-through into markets in general likely plays out over a longer time period.

Let's put it this way: we think there is another monster stock market decline out there. If it occurs, it will be driven by the same things that drive every major decline we have seen – leverage and investor hubris. We don't know when enough of that will accumulate to trigger a collapse, and we don't obsess about when it will happen. What we do is constantly seek a balance between many possibilities, and let our disciplined investment process be the guide. We see our role with our clients not as predictors of events and specific time frames. Rather, we are about sizing up the possibilities, weighing them intelligently, and allocating capital without much regard to the calendar. Nasdaq vastly outperforming NYSE has in the past been a warning sign of trouble to come. But when? Who knows. One thing our clients know is that we have already contemplated and plotted our approach should the bottom fall out after six generally strong stock market years.