Economic Predictions For 2012
2011 was an extremely volatile year, yet amazingly the stock market indices ended essentially unchanged. What’s in store for 2012. While predicting the future is not exactly easy, here’s what I think happens in the year ahead.
Stocks End Up 10-15%
While I believe volatily will still rear its ugly head from time to time, I think stocks will overall have a good year. At some point in the 1st quarter of 1st half of the year, I anticipate that there will be a European event which causes markets to shake a bit. This will likely be a good buying opportunity.
At some point, I believe that the Fed will also step in and perform more easing. This might not come in the form of a formal quantitative easing declaration, but it might come in the form of pegging future policy to unemployment rates. This will ensure further easing at the expense of inflation to get unemployment down. This will be bullish for stocks. It’ll be even more bullish for gold. While stocks end up on the year, gold will outperform stocks yet again.
The only risk here is that I expect corporate earnings have peaked. Corporate earnings will likely start getting revised lower. Despite this headwind, corporate profits will remain strong, dividends and buybacks will continue to be big and stocks will go higher moderately.
Housing Stays Crappy
While most of the declines in housing is behind us, the good days of housing are still a ways off. With foreclosures and the shadow inventory of houses still dragging down prices, it’s tough for any pricing gains to get traction. Moreover, the fact that unemployment on young people is high prevents new household formations. Lastly, current homeowners have to write a check in order to sell a house – this means they likely won’t have the ability to write a check for a down payment on a new house. The result? They stay put.
Middle Class Struggles
The struggles in the middle class aren’t going away because these struggles are rooted in structural issues in this economy. Unemployment might get marginally better, but it’s still elevated. The standard of living for the masses will continue to decline.
Politics
Politics will continue to be politics. While I’m a huge Ron Paul fan, it’s not likely that he’ll get the Republican nomination despite the fact that he’s doing very well these days. Expect an extraordinary amount of class warfare rhetoric as Barack Obama takes aim at Mitt Romney who has a net worth of $500 million. The Bain Capital private equity stuff that Romney has taken heat on so far… you haven’t seen anything yet. In the age of Occupy Wall Street, this is Obama’s best angle to get re-elected. Ugh, it’s so annoying.
The Good News
Despite an economy that remains sluggish and a political environment that is absurd to say the least, the good news is that your life can be fantastic no matter what is going on in the world out there. Stay grounded, enjoy your family and enjoy life! Happy new year!
I have to admit I agree with your overall assessment for the year. I think stocks are possibly setting up for a potential technical pullback set off by some sort of news either out of Europe or else where. Just today Consumer Sentiment came in unexpectedly lower. After the pullback though I can see a nice bull run heading into the rest of the year – barring any black swans of course.
Politically I feel like its going to be a long hot summer with a very divisive and bitter campaign, it’ll get ugly. Personally I’d love to see Ron Paul get the nomination but probably won’t happen.
In the end though on a personal note I think your right that we have no fate but what we make and as long as we focus on the important things in life 2012 can be a great year!
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"Stocks End Up 10-15%"
So far, you look like you're on pace for that prediction. Election year has to do with it?
Dear author its worth mentioning that middle class faced with huge challenge. And in 2012 situation will be unpredictable because of presidential elections.
Regards
Stan the freelance writer.
I agree stocks are going to end higher than at the beginning of the year, if only by force of rebounding after a dismal 2011. Investors have been exhausted in their pessimism and the direction should be up, but reservations apply – as always. One way or another, I wouldn't be fearful of making long-term commitments in the stock exchanges, especially in sold-out markets.
I see Africa as a great investment destination in the coming months and years. There is so much to do there that placing a part of your portfolio in the continent's shares, eg. by mutual funds, it a great tactic for above-average growth.
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i want to tell you about fees of hedge funds Some hedge funds charge a redemption fee (or withdrawal fee) for early withdrawals during a specified period of time (typically a year) or when withdrawals exceed a predetermined percentage of the original investment.
What do you think about Warren Buffett's recent IBM investment? Do you think it will outperform the market? I am thinking about buying but I think the market went up too much.
The facts about the hedge fund industry is that Includes a variety of investment strategies, some of which use leverage and derivatives while others are more conservative and employ little or no leverage. Many hedge fund strategies seek to reduce market risk specifically by shorting equities or through the use of derivatives.
The prediction may be fulfill for 2012. Advanced economy growth is expected to slow down as predicted .The pace of economic growth in 2012 is expected to edge higher, with inflation easing and the unemployment rate continuing to head lower It may happened.
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World is overcome from the problem of recession and i hope we get the better economic progress this year also.
he government reported Friday that the economy got off to a tepid start this year,Raising the income tax rate paid by higher-income taxpayers is a fair way to help raise the .economic growth factors.
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Hedge funds are not considered a type of mutual fund. While they are another type of commingled investment scheme, they are not governed by the Investment Company Act of 1940 and are not required to register with the Securities and Exchange Commission (though many hedge fund managers now must register as investment advisors).
Last year a world is facing a biggest economic crisis of recession . I thing 2012 will be the good year for strong economic growth.
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