Resilience and the State of the Market
I never thought of myself as the “Blogging” type and I am sure my three teenagers would concur with my self-assessment, but yet here I am, writing my first blog.
So what is exactly is a Blog? The dictionary definition list a blog as a noun – A web site on which an individual or group of users record opinions, information etc. on a regular basis or as a verb – add new material to or regularly update a blog. So with that in mind let the blogging begin.
Let’s look back at 2012 and then ahead to 2013 as it relates to the economy at large and the stock and bond markets specifically.
Resilience in the face of adversity seemed to be the theme for 2012. Hurricanes shuttered Wall Street for two days, cut oil production and decimated many families’ homes; the threat of a "Grexit" (Greek exit) from the euro; Europe's record unemployment and second recession in four years; Chinese growth hit a three-year low and there was uncertainty about elections here and abroad and the looming “Fiscal Cliff.” These obstacles slowed the progress of the global economy, but didn't bring it to its knees.
Resilience - Despite cracks in the French/German alliance, the euro-zone took action and gave Greece a reprieve on its debt reduction deadline.
Resilience - Despite growth that went from explosive to merely robust, China chose new leaders for the next decade who are considered to favor existing policies.
Resilience - Rock-bottom CD interest rates and treasury yields dropped even further as the 10-year bond briefly hit a record low of roughly 1.43% in July.
Although the stock market certainly experienced some volatility during the year, the stomach-churning declines of 2011 gave way to 2012's more moderate fluctuations and dramatically improved performance.
The Nasdaq stock index gain helped set the pace for the domestic indices for much of the year and generally remained above its 2007 high, while the Dow--the strongest of the five indices in 2011--took a back seat last year. And Resilience propelled the S&P 500's 13.4% gain for the year which was a definite improvement over the 0.0% gain of the year before.
In 2013, that Resilience could be tested. Though the last-minute bargain averted a full-scale plunge off the fiscal cliff, headwinds could pick up if Washington can't reach an agreement (again) on the debt ceiling and the spending cuts scheduled to begin in 2013. Like the previous attempts, I am confident Congress and the President will again come to a compromise, but I am sure not without a lot of bluster and grandstanding.
I expect to see improved personal consumption in 2013, improved jobs market, low inflation and an improving housing market which will help the stock market perform well providing opportunity for today’s investor and financial success in maintaining one’s standard of living throughout retirement.
Nathan Brammer is our VP-Financial Advisor with Vision Wealth Management.
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