Market Update; A Good Start to 2012

Hello and happy belated New Year investors and savers:

The last quarter of 2011 provided some relief from the drubbing of about 15% in the stock market’s third quarter, as share prices rebounded about 11%-12%. That still left prices basically unchanged dating back to the early August level before the USA’s credit ratings’ downgrade.The main market-related, but non-economic story in my opinion was the off-the-charts volatility of stocks and bonds. I reported on the crazy swing in stock prices during the third quarter in my blog post of mid-November.

Our stock market here in the USA strengthened its engagement and ties to the European mess playing out on the world stage daily; let’s pray a marriage proposal isn’t imminent. In 2011, foreign bourses fared much worse than their North American counterparts. The scoreboard: USA: +2.11% on the S&P 500 Index, Canada, -11%, Latin America, -22%, European region, -15% (the best performing markets there were Ireland, -1% and the U.K., off 6%). Asia and the Pacific region pretty much followed along on the downside: Pacific region, -18% (Indonesia and the Philippines were leaders here, up 3% and 4% respectively); Japan and China down 17-20%). The fear in Asia: they export big time to Europe and the U.S. so our slowly recovering demand-based economy has hurt their pocketbooks also. Does any of this make you feel any better? What worked best, in hindsight here on U.S. soil, was to shun stocks and pile into bonds.
 
Consumer prices (inflation) headed higher in 2011; the final tally was +3.0% up sharply from +1.6% for 2010 – hurting or at least hampering domestic spending, not to mention your dollars worth less even if you spend nothing. “Invest in inflation, it’s the only thing going up", Will Rogers once said. Employment, the chief driver of happiness and consumer confidence now-a-days, remains stubborn at 13.3 million folks jobless, or 8.5% (luckily 141 million still punch in for their daily grind).