fisher investments stock market outlook 2012 Stock Market Today ...

fisher investments stock market outlook 2012 ; A highly volatile, lackluster year finished on a high note, with the MSCI World Index gaining 7.6% in Q4.* Ken Fisher and the IPC expect positive market momentum to carry into 2012, creating an overall up-a-lot year for stocks in our view.

As last year began, Ken Fisher and the IPC said 2011 would likely be a "pause that refreshes" the bull market. Typical of the third year of a bull market, overall market returns in 2011 were negligible and marked by frustrating volatility, paring positive sentiment from 2010's newly minted optimists. US stocks ended up a hair, but foreign stocks were down even more?total world stocks split the difference. A steep mid-year correction tied largely to fears of recession and a European implosion (fears that failed to materialize yet again) hit economically sensitive categories like Emerging Markets, Materials, Energy and Industrials particularly hard. However, since the relative market low on October 4, 2011, these categories overall fared far better than the broad market.

In some ways, 2011's correction was similar to 2010's?both predicated on similar fears, though 2011's magnitude was a bit bigger and longer than 2010's. A key difference was 2010's started earlier?bottoming in early July, giving the market nearly six full months to recover in calendar year 2010. 2011's correction was only beginning in earnest in early July, so the recovery likely carries on into the front part of 2012. Also dissimilar, 2010's big bounce through year end helped sentiment improve?one contributing reason to our expectation that 2011 returns would be muted.

As 2012 begins, Ken Fisher and the IPC detect no sentiment bounce. Optimists are scarce, and ample skepticism is rampant?a bullish feature?providing a wall of worry for this bull market to climb. Headlines fret tapped-out consumers, sovereign debt, a Chinese hard landing, political wrangling, too much stimulus, too little stimulus, etc. Yet underappreciated positives abound. Corporate revenues and profits are growing at healthy clips, stock valuations are extremely attractive, the global economy continues to reach new highs?and that vibrancy likely continues into 2012. In the full Stock Market Outlook, Ken Fisher and the IPC cover these positive features in greater detail and explain why many of today's more prominent fears are either wrong or now too old to have much market-moving power going forward.

In Europe, the PIIGS face a rough road, but as Fisher Investments has covered in the past, their issues aren't new or uniform. In 2012, the issue of primacy and the dominant elephant in the room is Italy, which faces key funding hurdles early?almost half of its 2012 debt auctions on a money value basis occur in February, March and April. Its auctions likely proceed fine, but results needn't be spectacular?"just ok" will suffice to soundly beat doomsday expectations. Note, stocks move ahead of known events?they don't wait for clarity. Waiting for clarity is almost always very costly. What's more, in 2012, PIIGS fears turn three years old. Positive or negative, sentiment typically doesn't stay elevated on an issue for so long. Sentiment here likely improves, helping boost stocks.

Last year, Ken Fisher and the IPC also said Emerging Markets would do fine economically, but investors had become overly optimistic about Emerging Markets investing. And they underperformed, lagging developed peers even before the correction set in. Ken Fisher and the IPC believe Emerging Markets will reaccelerate in 2012, both from economic and investing standpoints, with particular strength in emerging Asia. Emerging Markets reacceleration should also benefit the global economy, especially resource sectors.

The US economic expansion should also continue, driven by a strong private sector. Some of the weak spots to date?namely employment and housing?will likely show some strength, throwing cold water on naysayers' frequent refrain that the US economy can't improve while those categories struggle. We're past "the pause that refreshes."

An additional sweet spot is we either re-elect a Democrat or newly elect a Republican. Historically, either outcome has generated above-average equity returns in election years. Ideologists from both parties have difficulty fathoming this for loathing of the opposition view?but it's true. We will either get a new love or decide we like what we have more than we like it now?either is bullish for 2012.

The greatest risk in 2012, in the view of Ken Fisher and the IPC, stems from eurozone politicians attempting to "fix" sovereign debt woes and/or the banking system with new regulatory/accounting schemes?resulting in unintended negative consequences. Their "kicking cans" strategy thus far has been appropriate, in Fisher Investments' view, and gives the private sector time to derive solutions. The eurozone likely continues to be weak economically, but not uniformly weak. And history shows a region even as large as the eurozone can be weak, but the rest of the world can be fine. Nor need European stocks do poorly this year. Many European markets are already well below their bull market highs, and recall, stocks move ahead of eventual economic recovery. Ken Fisher and the IPC are also mindful that Chinese officials have every incentive in 2012 (a leadership transition year) to deploy all means to boost growth. However, if they take another course, that could take the luster off Emerging Markets growth, a category Fisher Investments expects to be overall vibrant.

In short, Ken Fisher and the IPC anticipate 2012 to be as rewarding as 2011 was frustrating, which is covered in greater detail in the full report.

The Investment Policy Committee
Ken Fisher, Aaron Anderson Bill Glaser, Jeff Silk and Andrew Teufel

To download the full report, visit www.fi.com
For the latest updates on the stock market, visit Stock Market Today

Ken Fisher forecast 2012, fisher investments stock market forecast 2012, fisher investments stock market 2012, Emerging Markets growth outlook 2012-2013

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