2011 ended right around where it began, but that doesn’t begin to tell the whole story of what happened this year. I cannot remember another year that has this many twists and turns only to end up going nowhere. As I look back over the year and forward to 2012 a couple of things come to mind:
1. People like to focus on the day to day, headline driven, turns we have seen on the market. Those are interesting but they are just noise. The intermediate term trend is much more important. Over the last quarter of the year we definitely saw an improvement in the trend as investors started to move out of safe haven assets---Treasuries, Swiss Franc, Gold, and into stocks.
2. We saw a major decoupling of U.S. and international markets as we were the cleanest shirt in the dirty laundry. In a global marketplace it is highly unlikely that this disconnect can continue long term so something has to give one way or another.
3. What happens, or doesn’t happen, in Europe will continue to drive markets. No news or good news and we will probably rally. You already know what happens if we get bad news.