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Goldata Financial
Investing with the accent on rísk
STOCK MARKET COMMENTARY
January 2, 2012
From Elliot
Goldberg, Registered Investment Advisor, Goldata Financial
Last
week, equity markets limped over the finish line to end 2011 essentially
flat. With equity markets pretty much negative across the globe (China down ͂
20%), football’s “bend but don’t
break defense” can best summarize our equity market’s resilience.
U.S. bond market participants were the big winners this year as the Fed
continued to apply its thumb to keep interest rates artificially low in an
attempt to revive the economy and create jobs. In Europe, the music has stopped and
every country with the exception of Germany is scrambling for a chair. The Ponzi scheme of paying off debt with more debt has been
exposed there and the tough love that was attempted to restructure centuries
of learned behavior has generated little success. With the latest printing of
Euros through the LTRO plan, banks can borrow as much cash as they’d
like at low interest rates (1%) to hopefully buy European sovereign debt.
This charade is set to continue for 3 years in the hopes that either
something comes along to jumpstart their economy or that the solons in charge
can find gainful employment elsewhere. At least this will calm the
situation here for the next year or so and allow our equity markets to exhale
and return to historic valuations. With S&P 500 earnings projected at
$100 per share for 2012, a P/E of 14 yields a 12% gain for yearend 2012.
I’m looking for a 15-16 P/E and a 24% gain. Interest rates will remain
low at least through the summer as Bernanke has all the ammunition he needs
to fulfill his promise to keep rates low until 2013. Should the economy
improve as I expect, rates will start creeping up
towards yearend. This scenario plays well for President Obama’s reelection
hopes as the acceleration of the improvement in the economy should continue.
Unfortunately, jobs will continue to be at a premium and wages will continue
to lag as the policies of his administration continue to strangle the
entrepreneurial spirit which holds the key to the good paying jobs his
administration is looking for. Personally, 2012 shapes up to be a great year.
My daughter, Amanda, is scheduled to be wed to a terrific guy (Josh) in April
and I’m feeling great. I hope to be able to report good news to clients
in my next installment. If you’re curious, feel free to give me a call at
610 999-3599 and I’ll be happy to share with you the currently
unofficial good news.
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