Deja Vu

"Money managers are unhappy because 70% of them are lagging the S&P 500. Economists are unhappy because they do not know what to believe: this month’s forecast of a strong economy or last month’s forecast of a weak economy. Technicians are unhappy because the market refuses to correct and gets more and more extended. Foreigners are unhappy because due to their underinvested status in the U.S. they have missed a big double play: a big currency move plus a big stock market move. The public is unhappy because they just plain missed out on the party after being scared into cash. It almost seems ungrateful for so many to be unhappy about a market that has done so well. Unhappy people would prefer the market to correct to allow them to buy and feel happy, which is just the reason for a further rise? Frustrating the majority is the market’s primary goal."
-- Bob Farrell, Merrill Lynch
Source: Raymond James Financial, "Everybody’s Unhappy!?," by Jeff Saut (January 23rd, 2012)

This paragraph nicely describes the emotions existent in early-2012. However, Bob Farrell penned this in September 1989, way back when I was at Merrill Lynch. This is the nature of the market; rarely are investors content with what the market hath provided, and conversely, when investors are quite pleased with the market, that is generally a time when you should be concerned! While recent history should have little to do with today’s decisions, we know that it does. Investors who have enjoyed the recent move higher are wondering if it can continue in light of all the questionable economic news. While the investors who were scared into cash, are wondering if it’s too late.

My wealth management practice is built around a gameplan that constantly monitors the global markets and has adaptive characteristics, to change as they do. Being a successful investor is not about being correct 100% of the time, or even 95% of the time. Being successful, over time, is about constantly managing the risk in decisions you make, and whether proven "right" or "wrong" by the market, not staying wrong for long. Many investors feel as though markets collapse without any warning sign, which is very rarely the case. Often the signs are there, but few are looking for them, and even fewer still have the confidence and discipline to adapt to warning signs they may see.

The US Equity asset class remains the top ranked asset class and has started the year on a positive note - the weight of the evidence for this asset class continues to be positive.

A major headline in 2011 was the upward move in the price of Gold. Recently however, there have been some troubling signs from the yellow metal, not only in terms of absolute price, but in terms of strength versus other commodities. One of the beneficiaries within the Commodity space has been Crude Oil.

International Equities were an under- performing asset class last year. As the positive signs continue to mount, this will be an area to watch closely.

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