MARY BERSOT CFA — In November, 2011 we wrote: The US stock market is held hostage to the European headlines which are contributing to wild swings in prices and investor uncertainty.  Europe will move in the right direction at some point and the strength in our economy will overshadow these concerns. In the meantime fear of a severe recession in Europe or a falloff in emerging market growth could aggravate the problem.  These valid concerns will cause our market to be volatile well into 2012 and investors will remain on sidelines. If this isn’t enough our deficit reduction debate in the midst of election rhetoric will cause more confusion and volatility in our market. It is interesting that these words are still true today.  Not much has changed.  Investors remain on the sidelines and funds continue to flee US stock funds in favor of low yielding bonds.  This will reverse and when[more…]

MARY BERSOT CFA — The US stock market is held hostage to the European headlines which are contributing to wild swings in prices and investor uncertainty.  Europe will move in the right direction at some point and the strength in our economy will overshadow these concerns. In the meantime fear of a severe recession in Europe or a falloff in emerging market growth could aggravate the problem.  These concerns, which are valid, will cause our market to be volatile well into 2012 and investors will remain on sidelines. If this isn’t enough, our deficit reduction debate in the midst of election rhetoric will cause more confusion and volatility in our market. Our focus on economic headlines is unprecedented.

BY MARY BERSOT CFA — The investment environment feels like it is standing still, waiting for something to happen. You would think the unrest in the Middle East, the earthquake in Japan or the dismal housing market in the US would send investment prices lower. Quite the contrary! US stocks have finished the best quarter in 13 years – ignoring negative headlines and world events. Investors have not ignored the bad news. On the contrary, they are aware of the human tragedy and the impact of higher oil prices on the price of gasoline. However, these concerns haven’t been enough to derail the stock market because in the end it comes down to the alternatives.Stocks have climbed a wall of worry because other investment alternatives are not attractive.Cash is yielding less than 1% and bonds are around 4%. As long as companies report strong earnings and dividend growth continues stocks[more…]

BY MARY BERSOT CFA — THE ECONOMY: It has been two years since the severe recession began and it is still hard to conceive of a scenario for robust US economic growth. The magnitude of the decline in housing prices and job losses means it is doubtful we will witness growth equal to or better than 2007 any time soon. It will take years for consumer and investor confidence to be restored to the level needed to reduce unemployment to normal levels and reignite a rally in home prices. We will muddle along with anemic growth for some time until America’s financial health is restored and companies are more confident and begin hiring again. The economy is slowly recovering.  It is tempting to believe the future will look like the present.  It won’t.  The only certainty is that what we know today can change – and change quickly.