HAPPY NEW YEAR! Before we get into the crystal ball gazing it’s that time of year to do your portfolio checkup. I am updating all year-end total return numbers on all your accounts so you know what performed and what didn’t in 2011. Last year we expanded our investment allocation and I don’t see a reason to stop in 2012. Here is what I need you to do: Call me (or you can E) so I can print and send you your portfolio analysis. Once you have a copy we can talk (by phone is fine) and review your allocations (2) Examine your individual holdings (3) See what, if any, changes are to be made.
More than at any other time we all need to be proactive in our approach to saving and investing.
Now…for the crystal ball part…
No one knows what’s in store for 2012 but lots of guesses abound and some of those guesses were penned long before the minor stock rally that took place at the end of December.
On Christmas Eve WSJ writer Jack Hough said that there was signs of hope in the market and it was time for those investors who had been sitting things out to get back in. He went on to say that while it may be tempting to wait until after the Presidential election shares may move up in anticipation of the result.
The other side of my research was not as cheery. Almost all major Wall Street economists are full of gloom for 2012. One even predicted that the U.S. would fall into a recession, a victim of the mess in Europe.
No matter what anyone says or thinks we don’t know any more about what’s going to happen in 2012 than you do. We don’t know when the authors of the ‘guesses’ did their writing- was it when the markets were tanking or when things were perking up- believe me – it makes a difference.
What worries me is that the Republicans will continue their do-nothing assault on the President right to the election- keeping the country hostage and growth negligible. Certainly none of us saw politics as an impediment to growth back in January 2011. Today we are all losing patience with our elected officials.
Doug Kass, interviewed on CNBC on December 27th, said he expected politicians to get their act together and make pro-growth fiscal policies. This will cause the S&P 500 to soar. Kass, a principal at Seabreeze Partners, is known for his bearish views.
Michael Kahn, technical analyst at Barrons.com, reports the S&P trend-line shows a similarity to previous years where initially the markets tanked and then came roaring back. He thinks that’ll happen in 2012. He believes in the middle of next year great opportunities will arise. We shouldn’t give up, he wrote.
All that aside here’s what I think for 2012- remember this is just what I think:
- As weakness continues in Europe more money globally will start flowing to American stock markets.
- Real estate may have seen the bottom in 2011. Look around- I see new houses for sale and the sounds of hammers and saws. Home builder stocks may be worth more than just a look in 2012.
- Inflation not here in 2012. Certainly not what we can expect when interest rates start their climb.
- Some economists see a weaker dollar but weaker than what? Certainly stronger if the Euro collapses. Commodities higher on weaker dollar. Look for lumber, copper along with beef (Texas 2011 drought follow- through) and corn will move higher. It’s an election year and overall commodities may be relatively tame.
- In 2011 gold and silver were supposed to be currency replacements but the dollar was still the place investors wanted to be when the euro weakened. Both metals will take another run at their 2011 highs- $1900 and $50. respectively in 2012. No bubble for these metals, yet.
- Palladium whispered to be the play for 2012. Russia is the main supplier of palladium ore and news that it plans to cut production may see price rise. Palladium ETF – PALL Used in autos and also phones & tablets.
- Interest rates slightly higher in 2012- nothing worth writing about (this may be the surprise wrong opinion for 2012).
- Jobs perk up.
- Oil- $120. Middle East problems and emerging market use increases.
- China rocks- remember 3 billion people.
- On-line Poker Law passes. States need the money. Over $1 billion in revenue just for New York and another for California.
- The American consumer is back.
- Same old market volatility for 2012
- Investors may look at beaten up sectors in 2011 as clue to where returns will be in 2012. Also see beaten up Dow stocks and cherry pick.
- Markets End Higher in 2012.
Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.
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