Market Playground

By Walt Sokira

Legendary investor Peter Lynch once said, “If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes.” Keeping that in mind, here are our three minutes.

The year of 2011 started with high expectations, but there were plenty of bumps in the road, including unexpectedly severe problems with sovereign debt of some European countries, a first half soft patch in the economy and higher oil prices. The economy appears to have ended the year moderately stronger than it began the year.

Key points as we enter 2012:

· Prospects are better for 2012, but only if policymakers in Europe and Washington address critical issues.

· Europe’s current recession is expected to be mild, but the threat of a deeper downturn has financial markets nervous.

· Unless U.S. lawmakers act, federal fiscal policy will shave percentage points from real Gross Domestic Product (GDP) in 2012.

· Businesses will likely remain reluctant to invest and hire more aggressively until after the presidential election.

· Both manufacturing and housing are making slight comebacks.

· The consumer is slowly growing more confident. Measures of consumer sentiment improved in December.

With 2011 now behind us, all eyes are looking forward to what 2012 might bring. While we still believe that growth will remain slow for as far as the eyes can see, we also think that several factors may make 2012 much better for investors than most expect.

The stock market usually “votes” nine months in advance of the November elections, so if a positive change is in the offing, we may start to see a more positive stock market environment this spring.

Again, we do not want to suggest that the markets will return to 1990’s boom, but we do believe the stage is set where expectations are so low that it will prove difficult for investors to remain gloomy.

Whatever the market does in 2012, we continue to find and invest in individual stocks with strong 3-5 year price appreciation potential. Market outlooks will change, but our strategy and tactics will remain unchanged. We are focused on finding and investing in our best ideas – ideas that are both financially powerful and attractively priced.

The above article comes from Covestor. For more information on Walt Sokira, and to view his Focused Stock Research Covestor Model, visit Covestor.com.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.