By Jamie Robertson
Business presenter, BBC World News
Financial crisis has brought social tension as well as market slumps
The trouble with investing when things look at their bleakest is that one never quite knows whether the bleak you're experiencing is the bleakest, or just plain vanilla bleak, and the bleakest is yet to come.
Then again you would be hard pushed to see anything much bleaker than Iceland's stock market which, in dollar terms has managed to lose 97% of its value this year (a mere 94% in kroner terms).
So things can only get better? Well, not necessarily.
There are problems developing there that are simply not conducive to investing: inflation is at 18.1%, the IMF predicts the economy will shrink 9.6% next year and there are demonstrations and protests against the banks on a daily basis.
Social tensions are also emerging in Greece (the equity market is down 66%) and most worryingly in China, while in Russia, Deputy Interior Minister Mikhail Sukhodolsky warned that the slowdown "may aggravate the protest mood".
While unemployment remains high these are problems that can develop violently and unpredictably and take a long while to tackle.
Bleak may take on a whole new meaning in the months ahead.
WORST PERFORMING STOCKMARKETS 2008*
UAE - 72%
*Local Currency Valuations
The equity market losses globally have been astonishing: in the US, on the Dow, General Motors (-89%) Citigroup (-79%) and Alcoa (-74%) are the worst fallers.
Only Wal-Mart (+13%) and McDonalds (+0.5%) have made gains which tells us something about the evolving tastes of the credit-crunch generation.
In Japan the losers are a jumble of motor, software and electronics companies (Isuzu, down 79%, CSK, down 87%, Pioneer down 86%).
The few gainers include GS Yuasa (up 88%), the battery company that has signed a deal with Honda to make lithium-ion batteries for hybrid cars - an indicator that the markets still sees green opportunities in these straightened times.
As a region, the markets of Eastern Europe dominate the league of falling indices as the credit that underpinned their growth comes unstuck.
One of the few places where it hasn't disappeared is Tunisia, which is still benefitting from investment flows from the Gulf states.
Justin Urquhart-Stewart of Seven Asset Management however believes that as a recession is confirmed in the developed economies, the markets there may well start to recover - albeit slowly.
"There could be opportunities in strictly high quality, triple-A rated companies," he says.
BEST PERFORMING STOCKMARKETS 2008*
Costa Rica: -4%
South Africa: -27%
* Local Currency Valuations
"It won't be a recovery in a straight line, and there will be hiccups along the way. And we will see an increasing number of defaults, of course, among companies and then among countries as well. "
The biggest headache for investors this last year has not so much being in the grip of a bear market, but the sudden mid-year switch from bull to bear.
Until June there was a conviction that commodity prices would never stop rising.
In retrospect the maddest prediction came from Russia, which solemnly announced that we were heading for $300 a barrel oil.
With the price now under $40, shorting the oil price at that point (around $147 a barrel) would have made you rich today.
Buying into Treasury Bonds would also have been a wise move.
All that talk about rampaging inflation and sky-high commodity prices meant fixed rate government debt dropped in value.
Once the tone changed, and deflation became the rage, a fixed return of say, 5% for ten years, became suddenly very attractive, and treasuries whipped upwards.
Even when you include the poor performance for the first half of the year, the total return this last 12 months on US Treasuries has been 15%, while UK gilts and German bunds have returned around 12%. Even Japanese government bonds returned 3%.
But the bond bubble may be about to deflate, if not burst.
"Government's are going to have come up with some huge issues to finance their spending plans," Mr Urquhart-Stewart says.
"Then further out there's the possibility of inflation - certainly not yet but perhaps in three years time.
"We have have seen an increased interest in index-linked bonds which offer protection against inflation."
And what about commodities? The boom there is a distant memory now, but you will remember the story: much of it centred on China and India, and how they could decouple from the West's declining economies and soar ever upwards, gobbling every commodity available.
Well, as Mr Urquhart-Stewart puts it, "the red dragon of China has turned out to be a paper dragon."
As credit dried up and economies slowed, that everlasting demand proved to be anything but.
Now, most commodities are heading south, with the sole exception of cocoa which has been blessed with tight supply (a nasty fungus in the beans and heavy rains in West Africa) and constant demand from chocolate-hungry consumers.
The price is at 23 year highs and up 65% on the year. On top of that investors are using it as a hedge against sterling (it is priced, unusually, in pounds).
So a boom in a commodity which has some strong basic fundamentals and has been booted upwards by speculators?
Now, why does that remind me of oil nine months ago?
If the last 12 months has proved anything, it is how wrong all of us can be.