January 6, 2012

The New Year is starting out as we expected.  Investors seem to be in the early stages of re-thinking their extreme pessimism of last year.  We did not share this doom and gloom last year and we do not look for economic or investment Armageddon this year.  We do look for 3% to 4% growth in the U.S. economy and closer to 5% world-wide growth.  Europe will be the poorest performer and hold down average world-wide economic growth.  However; the austerity being forced on Europe, (and soon to be forced on the U.S.), is progressing and will be a longer term positive for the world economy.  Financial equities remain a true investment bargain.  Technology stocks are also good investments.  We remain positive on the MLP sector and foreign dollar bond funds.  We are negative on U.S. bonds other than some high yield issues.  Gold and silver prices will not collapse but we expect this year to be neutral at best for commodity prices.  We would be a little more bullish on the equity markets if interest rates could work higher.  This is one of the rare times in history when HIGHER interest rates would actually help the economy.    

Previous entry: November 14,2011