December 2011 Monthly Newsletter

Article by, Cleaton Lindsey

Year-end statements should be forthcoming.  If you have any questions about your statements or your investments, please give me a call.

On the morning of January 3rd, 2012, I turned on the television to check stock futures.  In addition to seeing large green numbers, the first headline I read stated (paraphrasing): stocks poised to move significantly higher due to global optimism.

Can you say, “More of the Same”?   The global economy was certainly the dominant theme the latter half of 2011 and I expect it will continue to be that way for the foreseeable future.  It is doubtful that the Eurozone financial situation was resolved over the holidays, but I like starting the year with “optimism” versus “pessimism”.

As for 2011, domestic equities did have a mini “Santa Clause Rally” to finish the year, leaving the S&P 500 unchanged, the Dow +5.5% and the Nasdaq -1.8%.  Keep in mind, the Dow represent significantly fewer stocks than either the S&P 500 or the Nasdaq.  The Willshire 5000 is the broadest domestic index and it was -1.3%.  In total, domestic equities were little changed.

The same; however, cannot be said for many international markets.  The USA Today (January 3rd, 2012 issue) listed the 2011 performance for many foreign markets.  Of the 18 they listed, not one showed a positive return.   Here are a few:  London (-5.6%), Seol (-11%), Frankfurt (- 14.7%), Paris (-17%), Japan (-17.3%), Hong Kong (-20%), ShanghaiB (-29.3%), etc….

Keep this point in mind when reviewing your 2011 statements.  If you have exposure to international or global mutual funds (as most diversified portfolios do), their performance likely had a negative impact on your overall account for 2011.

In terms of our economy, I’m optimistic.  The U.S. economy continued to grow in 2011 and while most of the world’s major markets struggled, the U.S. markets were resilient.  I take this as a positive, encouraging sign that the U.S. recovery will continue and potentially gain momentum.

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