The 4th quarter of 2011 proved to be a relief for the US markets after double-digit losses occurred in the 3rd quarter. However, the European debt crisis continued to subdue most of the appreciation of stock prices of companies located outside of the United States. Overall, 2011 was a difficult year to be a globally diversified investor.

As we head into Thanksgiving, US Economic reports have been favorable. Over 70% of the S&P 500 (an index that tracks 500 US companies) beat expectations. Unemployment reports have been marginally better, yet Europe continues to cast dark clouds above the financial markets.

Playing “Chicken” As the debt ceiling debate roars on and the markets continue to trade violently from head line to head line, I can’t remember another time that I have noticed such a blatant display of “politics as usual” from our government officials. As renowned money manager John Thomas points out, “The debt ceiling has never been used this way. They are taking a normal housekeeping matter and turning it into a political weapon.” A high stakes game of “chicken” in an attempt to gain a political edge during the 2012 election with the United States AAA rating at risk.

The old adage of selling off your stocks in May and going away until Halloween is appearing to be a pretty good investment strategy so far in 2011. The first 4 months of equity gains are beginning to be challenged as volatility begins to increase. The markets are getting nervous about the global debt problems experienced world wide and next month the US economy will finally attempt to walk on its own with out the monetary crutches of the Federal Reserve as the latest round of $600 billion of Quantitative Easing II (QEII) ends.

Climbing the Wall of Worry It’s really quite remarkable how quickly the stock market shrugged off the terrible tragedy in Japan, the unrest in the Middle East and North Africa, the rising price of oil and other commodities, and the continuing sovereign debt problems in Europe. In the month of March the stock market only took about a week off it’s six month advance by dipping briefly into negative returns for 2011 and then gaining it all back in a week.

2010 is now history and it caps a wild three-year ride in the financial markets. We ended 2007 near all-time record highs in the U.S. stock market, but then the wheels fell off. In 2008, markets fell dramatically and the world economy nearly imploded. In 2009, we realized that the world was not going to end and markets began to recover. In 2010, matters started to stabilize and return to some level of “normalcy.”

Individual investors are having a hard time deciding if they want to be bullish or bearish on the stock market.  The American Association of Individual Investors is a non-profit association of 150,000 investors. Each week, the association compiles a sentiment survey of its members which measures the percentage of individual investors who are bullish, bearish, or neutral on the stock market for...

The chicken or the egg?   Which came first, the chicken or the egg?  The same question can be asked of our current financial scenario.  Which came first…corporate America or the economy?  Which has the bigger influence on the other?  If you believe that corporate America came first, then you may be in the bullish camp and stocks may look like a bargain here. Corporations...

Déjà vu all over gain Last week investors cheered as the Dow conquered 10,000 yet again.  The first time it reached 10,000 was  March 16th, 1999.  Since then, the stock market has zigzagged above and below 10,000 more than 25 times.  You could call it a “tread mill economy” where there is plenty of action that is going nowhere fast.  As disturbing...

The Skybox View by Gregory Pacitti CFP®The last few days have shown us both the worst and the best days in the equity markets for 2010.  The major stock indexes abruptly turned negative year to date and then rocketed back to positive territory after the European Central Bank announced they will spend nearly $1 trillion bailing out Europe’s sovereign borrowers (like Greece, Spain,...