By: Mark Smith, CFP, CPA/PFS, CIMA (Principal) &
Charles Arnold (Financial Respresentative)
What will investors say of the year 2011? Was it a year of strong economic growth, market stability, and political clarity? Most would say certainly not. But for a year that was plagued by sudden spurts of chaos and volatility, the market itself held its ground. With a year such as 2011, it is all too easy to become entangled in a web of negativity, reading the headlines and watching the experts on television. Many found themselves plowing through uncertainty and fear, straight into a state of anger and contempt. It truly takes patience and objectivity to see through the muck and focus on the positives the year has given. From the market’s point of view, it was indifferent by year end and its subsequent performance was flat. Given all the major negatives, as noted herein, we view this as a big positive. We suggest you try and approach this past year in the same regard; positive that the market was relatively flat while the year was full of negatives. Push it aside and focus on the present and future. As we say frequently, turn off the news and turn on the music. Remain optimistic and positive, while maintaining confidence that the world’s problems will eventually be resolved.
(-)The Negatives:
Reflecting upon the above turmoil as noted above, the primary positive to come out of this past year is that the market has held up. As illustrated below, the S&P 500 ended 2011 fractionally lower than it began the year at around 1257, however the S&P 500 Total Return (S&P 500 including dividend reinvestment) up 2.1%:
There was much to cause concern over this past year. However, there were some very bright spots to 2011:
(+)The Positives:
Reflected in the impressive stability of the market this past year are several key takeaways. Going into 2012, we believe several conditions create a tremendous environment for stocks:
Below are two links to articles, from which some of the above facts were taken. If you click on the links, they will take you to the designated article where you can see many of the graphs and tables to supplement the points mentioned above. We encourage you to take a look.
In conclusion, given all the negatives for the year, the positives helped keep us afloat leading into a new year. The world has its problems, but we believe the United States will continue to lead the world from the depths of the financial crisis, into a very bright future. We must remain optimistic, make educated choices as investors, and keep our emotions locked away.
Wishing you and your family a very happy and prosperous 2012!
MJ Smith & Associates
Article Links:
1) Riverfront Investment Group’s The Equity View article entitled “Stocks have Limited Competition.”
The data presented in this concise article portrays a very optimistic view for the market going forward and a great buying opportunity for stocks.
http://www.riverfrontdev.com/commentary_includes/pdfs/equity/ev121411.pdf
2) Barron’s article entitled “2012 Outlook: Our Pros see stocks rising 12%, after a rough first half”
gives a nice overview of 2011 and what to expect going into 2012.
http://online.barrons.com/article/SB50001424052748704746704577094663331897678.html
#articleTabs_article%3D1
The S&P 500 is an unmanaged index of 500 widely held stocks that’s generally considered representative of the U.S. stock market. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and individual investor’s results will vary. Past performance does not guarantee future results. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of M.J. Smith and Associates and not necessarily those of RJFS or Raymond James.
Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. The opinions expressed are not necessarily those of Raymond James. The Riverfront Investment Group is an investment advisor offering sub-advisory services for Raymond James.
International investing involves additional risks such as currency fluctuations, differing financial and accounting standards, and possible political and economic instability. Also, investing in emerging markets can be riskier than investing in well established foreign markets. There is no assurance any of the trends mentioned will continue in the future. Investing involves risk and investors may incur a profit or a loss, including the loss of all principal. Dividends are not guaranteed and must be authorized by a company's board of directors. Mark J. Smith, Raymond James Financial Services, Inc., its affiliates, officers, directors or branch offices may in the normal course of business have a position in any securities mentioned in this report. All stock prices are quoted as of 12/30/11.
