Let the good crystal ball roll

- Europe muddles through much as it is, without collapse or solution.

- Global growth stagnates.

- US economy baselines but doesn't decisively recover.

- China continues to loosen policy with the risk to growth on the unimpressive side.

- Interest rates globally remain close to zero and hit 3.5 per cent in Australia.

- The $A holds above or around parity as it reflects the relative strengths of the Australian and US economies in Australia's favour.

In this scenario everyone would be doing the same things they did this year in equities: exit completely in favour of term deposits dabble in bonds and hybrids buy and hold anything with a reliable earnings' base and high yield (utilities, Telstra), or buy defensive stocks like healthcare, Ansell, Coca-Cola and Woolworths. Oh, and continue to hold banks because we always have and always will, whatever their share prices do.

The danger areas will continue to be resources that rely on China, commodities, hope, optimism and capital raisings. Dishonourable mentions go to print media and retailers as they struggle to meet the internet.

Big Australian companies will continue to access previously unavailable billions in long-term debt through international bond issues at less than 4 per cent, setting up their balance sheets for the next decade. Others will opportunistically tap the retail market with "note" issues that are snapped up as proxies for term deposits (which they are not, but who is bothering to do analyses these days when a big fat yield is involved?).

The other certainty is that the market will continue to be very volatile. Until the European situation is resolved, everyone will continue to focus on risk rather than reward.

In a normal market, reward (profits) change gradually and predictably, and a market priced on rewards moves progressively and almost predictably without shock. However, a market focused on risk is not progressive, nor predictable, because risk can change massively in very short periods and this is where we are at.

The market is being priced on the risk of European collapse versus European solution. It is such a dynamic variable that you simply cannot do much until it is resolved. Plus, with the global financial crisis so fresh in people's minds, every long-term investor is going to stay on the sidelines until this unknown is known.

Any forecaster arrogant enough to call the outcome can be rightly declared more of a gambler than a prophet.

So that is the "likely" outcome for 2012. Boring stuff. The bottom line is that Europe is a huge risk and not knowing has killed interest in the stockmarket and will continue to plague it until one of two possible headlines unfold:

- "Europe collapses." This will create the biggest buying opportunity in decades. There is a mighty rally as certainty returns and historically high yields and low price-earnings ratios are raided by long-term investors.

- "Europe prints money, collapse averted." After a short and sharp rally in sentiment, we suffer the death of a thousand cuts as the US, Europe and, ultimately, Asia come to terms with half the world operating zombie economies. Either way the message is "wait for it". The moment there is certainty, you buy.

Other 2012 implausibles:

- Australian government admits 2013 budget surplus will not be hit.

- Greece does not default on its 50 per cent of outstanding bonds.

- Barack Obama is re-elected.

- Angela Merkel smiles.

- The euro booms.

- Gold shows its colours as a store of value, rather than a speculative hedge fund-driven commodity.

- Australia's investment property market soars as buyers gear up.

- Stockbroker lists on the ASX.

- Stockbroker admits that recommending quality stocks with a high return on equity, strong free cash flow, proven management, reliable earnings streams, a strong balance sheet, high payout ratio and a proven track record is just a ploy to get an order in a bear market.

That's about it then. It's been a tough one but not that tough. Thank goodness our land abounds in nature's gifts. Where else would you rather be?