Investment Resolutions for the New Year

As we briefly review 2011, one thing is apparent: corporations generally had a better year than politicians, job seekers or investors. Despite 2011’s economic volatility, companies delivered better earnings than the consensus had forecast last January. Yet despite solid corporate profitability, macro uncertainties kept stocks under pressure for most of the year and ignited a simultaneous flight to the safety of U.S. Treasuries. With 2012 being an election year, we can expect to see even more sparring in Washington, D.C. than last year and a continuation of the battles within the 17 countries that use the Euro, as any long-term solution will require politically difficult choices. As we embark on 2012, some of the macro risks remain, but equity market valuations, especially compared to bond yields, look quite good. 2012 may prove to be as bumpy as 2011, but we are hopeful that it will also prove to be more rewarding to investors.