Monthly Market Update
FMA Advisory publishes a monthly market update for the benefit of our clients and other interested investors. Our goal is to provide timely information that will help you better understand ongoing changes in the market.
January 2012 – Market Update
After a year filled with wild gyrations, the U.S. stock market, as measured by the S&P 500, ended 2011 in just about the same place it began. The folly of looking to the market as a source of information is clearly evident, particularly during the second half of 2011. With volatility at all-time high, the only sure sign coming from the market was that none of its participants had much, if any, conviction in their opinions.
A more volatile market can be difficult for investors, leading to second and third guesses as to the best course to take. We believe that when the dust settles, fundamental value will shine through. While there were material events that impacted individual company's fundamental value over the past year, by and large, corporate balance sheets in the U.S. are healthy, and earnings have continued to grow.
At FMA we are not in the habit of making forecasts. However, we can be fairly certain that 2012 will hold more of the same, until the broader global market attains a greater certainty. Greater certainty hinges on Europe and its sovereign debt crisis and the United States' economic growth outlook. We are optimistic that the level of certainty will improve over the coming year, as Europe moves forward with a plan to address its debt crisis, and here in the U.S. we will have an election that is likely to clarify expectations with respect to future policy measures emanating from Washington.
Bear in mind, that by the time real certainty exists, the best opportunities in the market will have vanished. This is why we continue to advocate disciplined maintenance of asset allocation, with a bias towards value-oriented companies that share earnings via buy-backs and dividends. In addition, we advocate some international exposure, particularly emerging markets where future growth opportunities seem brightest. In fixed income allocations, we continue to favor high quality securities on the short side of intermediate maturities that will provide cash flow over the next three to five years.
As we begin the New Year, we would like to thank you for your continued trust in FMA Advisory. We're honored by the referrals from our clients and are committed to providing the sound financial advice that you have come to expect. We wish you and your family a Happy New Year, filled with peace, joy and prosperity.