Thursday, January 5, 2012

2011 Market Wrap Up - Much Ado About Nothing

S & P 500 2011

 We No Longer Need Predictions. The 2011 Final Numbers Are In!

The big news is the Standard and Poors Index managed to do something it could not have done if it had tried - after a year of great volatility, the index ended almost exactly unchanged. And this after the Japanese Tsunami, the US debt downgrade, and the Euro crisis.

The Dow Jones Industrial Average finished up 5.5% for the year, probably reflecting investor interest in dividend paying stocks.

International Markets Did Not Fair As Well

But note, all was not as well for the international markets. Britain's FTSE 100 lost 5.6% in 2011, Germany's DAX and France's CAC 40 declined over 15%, and the Hang Seng sank more than 20%.

Stock Market's Flat 2011 May Suggest Booming 2012

Jeffrey Kleintop of LPL Financial points out in his January 3, 2012 Market Commentary report, "There have been four years since WWII when the total return for the Standard and Poors 500 was roughly flat. All three of these years that preceded 2011 were followed by strong gains in the following year, averaging 38%."

While it is interesting to note the historical pattern which suggests that a strong 2012 may follow a flat 2011 (emphasis on may), the LPL Research outlook is for an average gain of about 8-12% in 2011.

Disclosure:  Indexes are unmanaged and investors are not able to invest directly into any index. Past performance is no guarantee of future results.