A financial review for 2011 and forecasts for 2012. Greg Goldstein hosts the online video version of his blog which can be found at: G2Cents.blogspot.com
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I am grateful 2011 is over. Financially, it was the most volatile year I have ever seen. Headlines, especially global ones, seemed to dictate the daily directions of the markets.
Good stock research often proved worthless as prices bucked the fundamental valuations. If you asked me on January 1st, 2011 what would return more, stocks or money market rates, I would have answered stocks. In actuality, if you count dividends and dividend reinvestment, stocks did outperform the money markets. Still.... one or two bad picks and the years return is blown. Cisco stock (my second largest holding) killed my yearly performance while Apple and Mercury and my large holdings of Costco, helped to stabilize my portfolio. I completely missed on my "earth commodity" plays with BTU and FCX. Gold was up on the year (plus I sold most of mine near the top). Natural gas was a bust, while oil prices rose on economic fear, not necessarily demand. A strengthening dollar increased the cost of our exports and altered profits on globally exposed assets.
Although my crystal ball is cracked, it is not completely destroyed.
I believe that Europe will show some sort of improvement and clarity of direction. Global stocks should improve from current levels but I'm not buying them except the multinational U.S. stocks. I believe the best returns will come from blue chip, dividend paying, U.S.equities. With dividends, we are getting paid to wait for more certainty in the markets. I like McDonalds (MCD), Chevron (CVX), Philip Morris (MO), Verizon (VZ) and Mercury Insurance (MCY one of my favorites but not a blue chip). I believe the dollar will weaken as Europe recovers. U.S. equities seem a safer bet than those abroad as we are the "cleanest shirt in a bag of dirty laundry".
I don't believe housing recovers nor do I see much of a reduction in unemployment. With the political uncertainty and the constant juvenile bickering in Washington, I think we're in for another year of lame duck politics. The results of the 2012 election will bring a sense of stablity for no other reason than we will have decided SOMETHING. I hope that some sort of bi-partisan jobs and economic growth plan will be put into action. We are in big trouble over the next decades if we don't get a grip on our deficit. We need spending cuts drastically, and domestic investment which allow us to once again compete globally as a world leader. I've said it before, the United States has to stop paying for the protection of the rest of the world. We need to cover our costs at least (in trade for something like gold or oil for starts). This is a political discussion for another time. (You can see my article Global Meddling and Domestic Ineptitude by clicking the link to one of my other blogs).
We have major problems with Iraq, Iran, Pakistan, Afghanistan: less so with Syria and Libya. Russia and China will continue to make forceful impact on the world stage. Of course, oil prices should rise on this turmoil and global stock markets will once again seesaw.
I believe gold will strengthen as it becomes less of a commodity and more of a currency. I think Natural Gas has to make some recovery along with depressed copper prices. Why America doesn't embrace natural gas with more enthusiasm is beyond me?
Having reviewed the hundreds of pages of newsletters, and the countless hours I've spent watching CNBC, I can't say 2012 will be much better despite a rally on 2012's first day of trading bringing the S&P 500 up 1.55% to 1277.06. Asked to predict where the S&P 500 will end 2012 I will say $1358, up 8% from it's $1257. Certainly, a good year compared to this one or current returns on bonds. I will be looking to buy on dips will less fear than I did in 2011. I am skeptically optimistic.
So there it is... my foggy crystal ball. When I was a Mortgage Banker and clients would ask me what direction interest rates are going, I would respond "he who lives by a crystal ball, dies of broken glass". Let's hope 2012 is band-aid free and that any nicks, cuts and scratches are minor ones.
Happy 2012 and good luck to all.
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Central Banks Buy Goldby TheStreetTV447 views
I'm out of the stock for 2012. Dow will keep climbing and only the fools will hold on. Watch out for the crash coming with high gas prices. Good video
iranwarcom 5 days ago