What To Expect 2011

 Last year’s prognostic romp into the future by Yours Truly was almost spot on. In a nutshell I was wrong on housing and unemployment saying it would stabilize but right on the money (get it?) with the investment markets being just okay but nothing to write home about. I was also correct on interest rates and the American consumer coming back to the market place. I thought we’d see more inflation coming at the end of 2010 and we did, sort of. The inflation we are seeing is in commodities and not in the Fed raising interest rates. Although we are seeing an anomaly as rates raise even as the Federal Reserve attempts to keep them low. I also wrote in December 2009 that something would happen we’re not concerned, or thinking, about and that things we are concerned about won’t. Case in point was the BP disaster that no one could foresee and what didn’t happen, which everyone worried about, was a double dip recession.

I write this before the professional soothsayers buff their crystal balls and publish their predictions. The reason is to prove you don’t need a doctorate in economics to look forward and guess. Think the pre-football game show and watching the football experts bat .500; and that’s without the spread! Guys and gals in the office pool do better and that’s with the spread.  Here’s my thoughts, which are subject to change, amendment or denial:

• We’re due for a good 2011 market year. Figure double digit domestic markets.
• Emerging markets, the traditional Brazil, India and China musketeers should do well going forward.
• Expect more pain from EU, Spain and Portugal.
• Interest rates will go up fourth quarter as the Fed sees unemployment numbers fall.
• Big surprise of the year as metals tumble and recover.
• Housing does stabilize and prices get a bit stronger.
• Consumer spending increases over 2010.  Retail starts looking good.
• Look to manufacturing to add jobs and increase profits.
• Inflation starts its peskiness as rates go up a bit; a force of the consumer spending more and with emerging market consumers joining the party and wanting the same things Americans have and go on their own spending binge.

Finally, expect the unexpected which will cause concern and market gyrations. Keep your allocations simple. Review what you own and if you don’t understand what you own maybe it doesn’t belong in your portfolio.

Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.