Well, it's been quite a year...one of abrupt market swings, struggles in the global financial markets and ridiculous political wrangling - but with little or no direction. This is not over, but there is reason for optimism, even during uncertain times.
On The Positive Side
The US economy has held up relatively well. Economic growth is around 2%, jobless claims are lower and the unemployment rate has fallen to about 8.6%. Holidays sales were much improved, inflation is low and consumer confidence has shot up in recent weeks.
Not Out of the Woods Yet
We play a waiting game with Europe and their sovereign debt problems but hope the politicians will muddle through and take firmer steps toward a more effective fiscal union. Continued negative stock market reactions in international markets could create the push that European politicians need to make tough decisions.
US housing markets are still sluggish (though doing pretty well locally), high deficits and political infighting continue to create uncertainty, which makes it tough to know how 2012 will fare. We have been strategically reducing exposure to the developed European markets for most and are adding extra weight to US dividend paying stock funds, where appropriate. See the 2011 Market Results Chart on the right.
And Now?
Most client portfolios ended up relatively flat or with modest losses, depending on their particular allocation between US stocks, international stocks, bonds and cash. Our goal is to keep you diversified and to try and protect against downturns until some of the uncertainty has subsided. This approach may result in missing some of any stock market up-term, but that is a risk worth taking.
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