Market Insights for 2012, What the Experts Are Saying

With a difficult 2011 behind us; most investors are wondering what we can look forward to in 2012, here is what some of the experts are saying:

The U.S. will be our silver lining.  The U.S. is at the very early stages of recovery, credit card defaults are back to pre-recession levels and the housing market is starting to grow - however slow – it is moving in the right direction.   Corporations in the U.S. are cash rich; and there were over 200,000 jobs created heading into 2012.  These are all vital signs that a U.S. recovery is taking hold and a sustainable economic recovery is quite possible.

The Canadian market is expected to pick up in the ladder half of the 2012; due to increasingly positive news from both the U.S. and Europe.  Our dollar is also expected to hold steady against the greenback throughout the year.  Although our labor market and consumer spending is starting to slow, business investment is on the rise; and expected to continue.

Policy makers in Europe continue to hammer out their debt financing problems and will do so for the next few months.  Many believe Europe will go into recession very soon if they are not already in one.

China is entering a controlled slowdown of their economy.  Although most predict a soft landing for China, this slowdown in their housing market directly affects our Natural Resource industry, purchase orders from China for Canadian lumber are at a 34 month low.   

This global economic recovery will continue at two speeds, whereas the emerging markets will consistently outperform the economies of the more developed nations.

So where do we invest this year?  With people’s appetite for risk almost at zero; Dividend Paying Stocks, Corporate Bonds, and REITS (Real Estate Investment Trusts) all look good. 

This is my 18^th year in this business, and my third downturn.  We are told corrections happen on average every 5-6 years, so the numbers make sense.  All we can do is position our portfolios to protect ourselves in the downturns and make money in the up swings. 

If you want to make sure you are positioned properly for the year ahead, don’t hesitate to give me a call.

Happy 2012!

Tracey

Sources:  Benjamin Tal, CIBC and staff at advisor.ca