Surprise No. 3: Stock prices and P/E multiples decline.
While the S&P 500 closed 2013 at its yearly high, equities will close 2014 at their yearly low.
Stocks trade in a relatively narrow range over the next six months but fall in the second half, ending the year at their low, with a decline of between 5% and 15%.
Valuations decline in 2014. Last year's animal spirits subside as P/E multiples, which increased by nearly 25% in 2013, fall by about 15% in 2014.Strategy: Buy index puts, sell index calls, or purchase inverse ETFs.