It’s Almost the End of January and you’re still In the Market!

January 27th, 2011

This means you are staying in this year, right?
Wall Street, of course, is all gungho on the prospects for 2011. And the Dow Jones shows that it is so. The index passed the 12000 mark yesterday and seems poised for continuing increase. That is, if there is not another outbreak of war, disease, oil spill or other disaster. As enthusiastic as the market and the players are, they are quite the most sensitive things known to man. It’s the old Butterfly Effect all over again: some guy in a far-off place sneezes, CNN reports it and within 2 hours it’s a world-wide pandemic. The market drops in the space of half an hour and then it takes 3 months to recover that loss.

My portfolio
My own portfolio is up, not as much as I had thought it would be. Of the 5 shares in it, I never seem to get a day when all 5 rise, so the end result is that it ‘hovers’. All this does is make me grateful that it is not falling.

The consensus
The general consensus is that U.S. stocks will have another good year as the economy continues to heal. Bonds may prove more risky than they appear as the fear factor fades. And the bulk of the gains in “risk assets” like stocks and commodities will be driven by peppier growth in China and other emerging economies. It’s comforting to know that virtually everyone on Wall Street is forecasting that the U.S. stock market will go up, with gains ranging from 3% to 26%. But much of the illuminating and interesting stuff to ponder is buried in the fine print of the annual outlook pieces.

But
While most prognosticators are predicting the market will finish 2011 higher, at least two investment firms are warning of a stock market peak, and a return of the dreaded bear, as in bear market. An investment team at Ned Davis Research, led by chief investment strategist Tim Hayes, is expecting the Standard & Poor’s 500-stock index to make a run at its 2007 all-time high of 1565.15 in the first half of 2011, thanks to seasonal tailwinds and economic conditions moving in the right direction around the world.

The population milestone
Sometime in 2011, the world’s population will cross the 7 billion threshold for the first time, and that has investment implications, says Joseph Quinlan, chief market strategist at U.S. Trust. “Seven billion people represents a lot of mouths to feed and a lot of underlying demand on planet Earth’s finite resources,” Quinlan wrote in the report “2011: A Year of Key Milestones and Special Anniversaries.” As a result, he is bullish on energy and agriculture commodities.

Gold
An ounce of gold closed at a record high of $1,421.10 on Friday, and was up about 30% for the year. But heed the warning that “the recent momentum in gold is more mania than fundamentally driven.” Gold is benefiting from investors’ fear and their thirst for hard assets that retain their value in tough times. Advice: “Reduce gold exposure at current price levels.”

This entry was posted on Thursday, January 27th, 2011 at 5:37 am and is filed under Economy, Employment, Money, Personal / Internet. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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